NBSIR 78-1528

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AN ECONOMIC ANALYSIS OF

BUILDING CODE IMPACTS:

A SUGGESTED APPROACH

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John S. McConnaughey, Jr.

Building Economics & Regulatory Technology Division

Center for Building Technology

National Engineering Laboratory

National Bureau of Standards

Washington, D.C. 20234

October 1978

U.S. DEPARTMENT OF COMMERCE, Juanita M. Kreps. Secretary

Dr. Sidney Harman, Under Secretary

Jordan J. Baruch, Assistant Secretary for Science and Technology

NATIONAL BUREAU OF STANDARDS, Ernest Ambler, Director
I
PREFACE

This research was sponsored by the Building Economics and Regulatory Technology Divison of the Center for Building Technology. This

study examines the economic impact of building codes and develops an assessment methodology to evaluate the benefits and costs of specific

building code provisions.

Dr. Harold E. Marshall, Chief of the Applied Economics Program,

Robert E. Chapman, and Stephen R. Petersen of the Applied Economics

Program offered invaluable help by reading, discussing and commenting

on earlier drafts of the report. The author also wishes to acknowledge

the useful comments and suggestions from other Bureau reviewers of

the report, including William J. Meese, James H. Pielert, Dr. Stephen

F. Weber, and Dr. Carol Chapman.
ABSTRACT

This report suggests an evaluation approach which can be used by

building officials and legislative bodies faced with making building

code decisions. A method to evaluate many of the potential benefit and

cost impacts of specific building code provisions is developed. The

report also defines and categorizes the economic impacts of building

codes. While no approach to classifying building code impacts will be

fully appropriate for all uses, the definitions and categories proposed

may help to clarify or reconcile some of the differing opinions

concerning the impact of building codes. Finally, the report illustrates

the suggested approach by evaluating the 1 975 National Electrical Code

requirement for the use of Ground Fault Circuit Interrupters (GFCIs)

in residences. Based on sensitivity analysis, estimates are made of how

much it costs society in order to save one life through the GFCI code

provision. This case study conclude that the estimated cost to save a life is nearly $4 million. A lower bound estimate of the cost to save

a life is about $2.5 to $3.5 million.

Keywords : Benefit-cost analysis; benefit-risk analysis; building codes

and standards; building regulations; building safety; economic analysis;

economics of safety; ground fault circuit interrupters.

TV
SI CONVERSION UNITS

The conversion factors and units contained in this report are in accordance with the International System of Units (abbreviated SI for Systeme

International d'Unites). The SI was defined and given official status

by the 11th General Conference on Weights and Measures which met in

Paris, France in October 1960. For assistance in converting U.S. customary units to SI units, see ASTM E 380, ASTM Standard Metric Practice

Guide, available from the American Society for Testing and Materials,

1916 Race Street, Philadelphia, PA. 19103. The conversion factors for

the units found in this Standard are as follows:

Length

1 in = 0.0254* meter

1 ft = 0.3048* meter

1 mi 1 = 0.001* i n

1 yd = 0.9144* meter

Area

1 in^ = 6.4516* x 10“^meter^

1 ft^ = 0.0929 meter^

1 yd^ = 0.836 meter^

Vol ume

1 in^ = 1.639 x 10_5meter^

1 liter = 1.00* x 10"^meter^

1 gallon = 3.785 liters

Temperature

°C = 5/9 (Temperature °F -32)

* Exactly

v
TABLE OF CONTENTS

Page

PREFACE iii

ABSTRACT iv

SI CONVERSION UNITS v

TABLE OF CONTENTS . vi

LIST OF TABLES . viii

LIST OF FIGURES viii

1.0 INTRODUCTION 1 1.1 PURPOSE 1 1.2 BACKGROUND AND PERSPECTIVE 2 1.3 SCOPE AND ORGANIZATION 4

2.0 TAXONOMY OF BUILDING CODE IMPACTS 5 2.1 THE NEED FOR A TAXONOMY 5 2.2 DEFINITIONS AND BASIC CONCEPTS 5 2.3 TYPES OF IMPACTS 7 2.3.1 Building Code System Impacts 7 2.3.2 Income Distribution Impacts 10

Producer Impacts 10

Consumer Impacts 13

2.3.3 Benefit-Cost Impacts 14

3.0 ASSESSING BENEFIT COST IMPACTS 15

3.1 DEFINING THE PROBLEM AND CLARIFYING THE OBJECTIVE 16

3.2 IDENTIFYING THE ALTERNATIVES 17

3.3 IDENTIFYING THE BENEFITS AND COSTS 18

3.3.1 Benefits 18

3.3.2 Costs Annual 18

3.4 ESTIMATING THE BENEFITS AND COSTS 19

3.4.1 Changes in Safety 21

Determining the Annual Loss 21

Determining the Effectiveness of the Code Provision . 23

3.4.2 Changes in Construction Cost 24

Developing Typical Designs 24

Estimating Changes in Construction Cost from Typical

Desi gns 25

Estimating the Total Change in Construction Costs for

the Base Year 25

3.5 PERFORMING THE ANALYSIS 25

3.5.1 Estimating the Effective Useful Life 25

3.5.2 Estimating Potential BEnefits and Costs Over the

Effective Useful Life 26

vi
Page

Deaths and Injuries 26

Dollar Measures of Benefits and Costs 26

3.5.3

Developing Measures for Comparing Benefits and Costs. 28

3.6 ASSESSING THE RESULTS 32

4.0 GROUND FAULT CIRCUIT INTERRUPTERS — A CASE STUDY 34

4.1 ESTIMATING GFCI BENEFITS 34

4.1.1 Electric Shock Deaths 34

4.1.2 Establishing a Base Period and Estimating the

Proportion of Building Affected 36

4.1.3 Determining GFCI Effectiveness 36

4.2 ESTIMATING GFCI LOSSES 38

4.3 GFCI ANALYSIS 46

4.3.1 GFCI Technical Characteristics 46

4.3.2 Estimating the Potential Benefits and Costs 47

Benefits 47

Costs 47

4.3.3 Estimating the Cost Per Life Saved 48

4.3.4 Analysis of Injuries and Electrical Fire Losses 48

Injuries 48

Fire Losses 49

4.4 GFCI Sensitivity Analysis 50

5.0 SUMMARY AND CONCLUSIONS 54

REFERENCES 55
LIST OF TABLES

TABLE PAGE

3.1 Present Worth Factors for a Discount Rate of 10% ..27

3.2 Weighting Schemes 31

4.2 Deaths from Electric Shock in the Home 35

4.2 Estimated Installation Cost Per Unit by Electrical Layout

and Census Region 43 •

4.3 Estimated Number of Electrical Layouts by Census Region 44

4.4 Estimated Aggregate Installation Cost by Type of Electrical

Layout and Census Region 45

4.5 Sensitivity Analysis 51

4.6 Cost Per Life Saved for Different Lives 52

4.7 Average Installation Cost Needed to Achieve a Given Per

Life Saved 47

LIST OF FIGURES

FIGURE PAGE

3.1 Decision Tree 31

4.1 Design Dl: 1200 Sq. Ft. Rambler 57

4.2 Design D2: 2000 Sq. Ft. Two Story 59

viii
1.0 INTRODUCTION

1.1 PURPOSE

The major purpose of this report is to suggest an approach to

evaluating building code provisions which can be used by building

officials, legislators, and other decision makers. It describes a way

to measure and evaluate many of the potential benefit and cost impacts

of a specific building code provision. The approach uses a model which

shows how to organize information in a form which can be of greater use

to decision makers. Although some benefit or cost information is incomplete or uncertain, so that exact estimates cannot be made it is hoped

that more complete information developed by the approach will lead to

better public decisions. In an area as complex as building regulations,

however, no claim is made that this approach can be applied to every

code provision nor that all concerned parties will use it to reach the same decision once an evaluation is made. But each step is explicit

and assumptions are clearly spelled out. Moreover, the use of sensitivity analysis, which is a method to examine uncertain assumptions or information, can help identify key assumptions and research/i nformation

needs.

Another purpose of this report is to develop a classification

system (or taxonomy) which defines and categorizes the different types

of building code impacts. There are conflicting opinions concerning

the magnitude and importance of building code impacts. A taxonomy is

useful because it provides a framework for understanding and investigating these impacts. Building codes and other related building regulations

are believed by many to promote inefficiency, increase costs, or impede

innovative building technology. Other experts believe the impact of

building codes on efficiency and costs is small. With respect to safety, some observers contend that building codes set unreasonably high safety

requirements while others, pointing to losses from fire, accidents,

natural disasters, or other hazards call for additional code protection.

Controversy over the impact of building codes exists for several reasons. One reason is the lack of a consistent language or set of specific

definitions concerning building codes and their impacts. Another reason for conflicting opinions is that different members of the building

community have different perspectives, and they are concerned about

different types of impacts. Finally, building codes are only one of

a large number of interrelated factors which influence performance in

the construction sector1

. The relationship between building codes

^ther strong influences include cyclical and seasonal fluctuations,

regional shifts in demand and in composition of output, sensitivity

to monetary policy, changes in the construction material supplying

industries, and institutional factors (such as other building regulations, zoning and land use regulations, union influence, the organization of contracting/subcontracting systems, and the separation of

design from construction).

1
and these other factors is difficult to assess due to the complexity

of the sector, the heterogeneity of the output, and poor construction

statistics. While no single set of definitions or approaches to

classifying building code impacts will be fully appropriate for

all uses, the definitions and categories proposed in this report

may help to clarify and reconcile some of the di ffering- opi nions

concerning the impact of building codes.

A third purpose of this report is to illustrate the evaluation

approach developed herein. The 1975 National Electrical Code requirement for the use of Ground Fault Circuit Interrupters (GFCI) in

residences is analyzed.

1.2 BACKGROUND AND PERSPECTIVE

Building codes are one of the more important types of building

regulation. From the Code of Hammurabi, (about 1700 B.C.) to the

present, such codes have sought to ensure safe buildings. However,

building codes are believed by many to unduly increase the cost of

buildings. Modern critics might still agree with a 1920 Senate

Committee report which concluded:

The building codes of the country have not been developed

upon scientific data, but rather on compromises; they are not

uniform in principle and in many instances involve an additional

cost of construction without assuring most useful or more durable

bui 1 di ngs.

Criticism has been growing in recent years. In the late 1960's, three

national commissions, the Advisory Commission on Intergovernmental

Relations (ACIR), the National Commission on Urban Problems (the Douglas

Commission) and the President's Committee on Urban Housing (the Kaiser

Committee) identified building codes as important factors affecting

the efficient production of housing.

1 See the Advisory Commission on Intergovernmental Relations (ACIR)

report, Building Codes, A Program for Intergovernmental Reform , Washington, D.C., 1966, for a review of the early criticism

of building codes.

2 The ACIR Report, Building Codes, A Program for Intergovernmental

Reform ; the report of the National Commission on Urban Problems

(the Douglas Commission Report); Building the American City , Washington, D.C., 1968, and the report of the President's Committee

on Urban Housing (the Kaiser Committee), A Decent Home, Washington,

D.C., 1968.

2
A recent book. The Building Code Burden , contends that "Misuse of regulatory powers has resulted in higher than necessary housing costs, obstruction of new building technologies, inefficient use of scarce national

resources, and discrimination against lower income families." 1 A recent

Ford Foundation study identifies building codes as one of the significant

institutional barriers to the introduction of new energy technologies

for bui 1 di ngs.

Most observers, including members of the building community, would

probably agree that building code regulations and the entire regulatory

process can be improved, and a number of reforms have been initiated

following the ACIR, Douglas Commission, and Kaiser Committee reports.

These reforms include: (1) efforts by the Federal government to promote

performance rather than specification standards, most recently through

the establishment of the National Institute of Building Sciences (NIBS),

(2) a move by State governments to increase their enactment of state-wide

building codes, (3) the formation of the National Conference of States

on Building Codes and Standards (NCSBCS) for the purpose of improving

uniformity and reciprocity of codes between States, and (4) increasing

cooperation between the model code associations through CABO -- The

Council of American Building Officials. This organization was formed to

promote uniformity in building codes and has sponsored a single-and

two-family dwelling code.

But at the same time that reforms have been initiated to reduce the

adverse impact of building codes, the use of building codes and other

building regulations has increased dramatically. One reason is the

growth of building innovation. Some innovation has involved substitution

of one building material or skill for another induced by changes in

supply prices of labor or materials (such as the rapid increase in

the price of building materials in the late 1960's and early 1970's)

or by occasional shortages of a particular material or skilled labor

input. Government has also encouraged building innovations in programs

such as Operation Breakthrough. The number of building code provisions

grow as new building innovations increase the diversity of products,

designs, and building techniques. A second reason is that new building

code provisions and regulations have also been introduced to satisfy

1 Field, Charles G., Rivkin, Steven R., The Building Code Burden , Lexington Books, Lexington, Mass., 1975, p. 129.

c Schoen, Richard, Hirshberg, Alan, and Weingart, Jerome, New Energy

Technologies for Buildings: Institutional Problems and Solutions , Ballinger Publishing Company, Cambridge, Mass., 1975.

DJ Schoen, Richard, Hirshberg, Alan, and Weingart, Jerome, New Energy

Technologies for Buildings: Institutional Problems and Solutions . See Appendix C for a thoughtful summary of building code reform

proposals and programs.

3
a broader definition of public welfare. State and national energy

conservation regulations are the most prominent example. Regulations

to accommodate needs of the physically handicapped and provisions

requiring more secure doors, locks, and windows are others.

1.3 SCOPE AND ORGANIZATION

Section 2 develops a taxonomy to define and categorize building

code impacts. A taxonomy is a systematic method of classification which

can provide a framework for examining problems. Three major categories

of building code impacts are described: (1) building code system

impacts , (2) income distribution impacts , and (3) benefit-cost impacts .

' Only the third category, benefit-cost impacts, are treated in depth

by this report. Section 3 suggests an assessment methodology based upon

benefit cost analysis to measure, organize, and evaluate the potential

benefits and costs of specific code provisions.

To illustrate the assessment methodology. Section 4 summarizes the

results of a case study which examines the 1975 National Electrical Code

requirement for the use of Ground Fault Circuit Interrupters (GFCIs) innew residences. GFCIs are devices designed to protect occupants against

electric shock. Using sensitivity analysis, a range of estimates are made of how much the GFCI code provision costs society per life saved.

The report concludes in Section 5 with a discussion of the limitations of the approach, recommendations for implementing the assessment

methodology, a summary of findings, and recommendations for future

research.

4
2.0

TAXONOMY OF BUILDING CODE IMPACTS

The purpose of this section is to develop definitions and a taxonomy

which can be used as a framework for understanding and investigating

building code impacts.

2.1

THE NEED FOR A TAXONOMY

The impact of building codes can be examined from many perspectives.

Homebuilders may be most concerned about the inconvenience and higher

cost associated with compliance. Building code officials may stress

technical or safety characteristics. Labor unions or building material

producers may be most concerned about the impact of a particular

code provision on them - that is upon employment or sales. Other members

of the building community (architects, industrialized builders, subcontractors, national policy makers) have somewhat different concerns.

Impacts may be local, regional, or national. Although some impacts

are direct and relatively easy to assess, many are hidden, indirect,

or closely interrelated with other building regulations. As the introduction indicated, reports by national commissions such as the Douglas

Commission and other studies have identified many of these different

types of impact. However, there is a wide range of opinion concerning

the seriousness and magnitude of the problem.

Many of the recent reform efforts have been additive to the system

-- that is, new organizations with new concerns or responsibilities

have been added (they have not replaced existing organizations) to

the existing system. The increase in the use of building codes to

achieve new welfare objectives such as energy conservation or provision

for the handicapped is also additive to the system. Thus, the need

for a taxonomy is becoming more important as efforts to reform and

improve the regulatory process have increased.

2.2

DEFINITIONS AND BASIC CONCEPTS

It is assumed that most readers are familiar with the building

industry. Nevertheless, it is necessary to define some terms and

concepts before the taxonomy of impacts can be examined in detail.

A building code is a set of provisions regulating construction of

buildings to protect the public health, safety and general welfare

which become legal documents when adopted by Federal or State statutes

or administrative regulation, or by local ordinances. For the purposes

of this analysis, a building code is intended to include the broad

definition providing for all building related elements such as structural, mechanical, plumbing, and electrical materials and systems.

The term building code system refers to the group of institutions

which have evolved in the United States to regulate building construction

through building codes. In addition to local and State building codes,

major elements of the building code system are model codes, voluntary

5
standards which are referenced in codes, and the public and private

testing, certifying, research, or coordinating organizations which

are specifically concerned with building codes and standards. Examples

of such organizations are the National Conference of States on Building

Codes and Standards (NCSBCS), the American National Standards Institute

(ANSI), the American Society for Testing Materials (ASTM) , Underwriters'

Laboratories (UL), the National Institute of Building Science (NIBS),

and the National Bureau of Standards (NBS).

The building code system is a major subset of the building regula - tory system . Major elements of this system include other State and

local statutes or ordinances such as health codes, architectural codes,

housing codes, environmental regulations, and zoning or subdivision

regulations . In addition to State and local regulations, other major

elements are Federal government actions which affect construction.

These irrclude: (1) Federal regulations issued by agencies, such as the Mobile Home Construction and Safety Standards issued by the Department of Housing and Urban Development (HUD), (2) Federal Conditions

of Participation such as the HUD Minimum Property Standards (MPS),

and (3) Federal procurement or construction criteria by agencies such

as the General Services Administration (GSA).

Building code impacts are the effects or consequences of building

codes (a single building code provision, a building code, or of the build

ing code system as a whole). A distinction between local, regional and

national impacts is important because the type and magnitude of impacts

can vary within each of these areas. Moreover, different types of

decision problems and types of building code reforms may be necessary

for each of these areas. Local impacts concern effects or consequences

within a single code jurisdiction. The single code jurisdiction area may

be a city, a county, or a State. Regional impacts concern effects of

building codes in different code jurisdictions within a construction

market area. The construction market area can vary in size and may.

extend to more than one State. For conventional housing construction

the market is often confined to a large metropolitan area. Specialized

types of building construction or manufactured housing may have somewhat

larger market areas. National impacts concern effects or consequences

of building codes for areas larger than the regional construction

market area. These different types of "area" impacts are discussed

in greater detail in the next subsection, which classifies building

* For a recent description of other building regulations which affect

housing see Seidel, Stephen R., Housing Costs and Government Regula - tions: Confronting the Regulatory Maze , The Center for Urban Policy

Research, New Brunswick, New Jersey, 1978.

I wish to thank Robert Kapsch of the National Bureau of Standards,

Center for Building Technology, for suggesting this break-down of

Federal actions which affect construction.

6
code impacts into three major categories, based primarily upon the

economic characteristics of the impacts.

2.3 TYPES OF IMPACTS

2.3.1 Building Code System Impacts

Building code system impacts concern impacts which are due to

the institutional system which has evolved to regulate building construction through building codes. Building code system impacts primarily

stem from the non-uniformity and diversity of building codes between

jurisdictions, and from the product acceptance process. The impacts

can be roughly divided into three subcategories: (1) duplication impacts,

(2) building innovation impacts, and (3) production organization impacts.

Examples of duplication impacts are added administrative, compliance

marketing or testing costs incurred by private firms, and added administrative costs by public agencies. At the regional level these impacts

primarily affect builders and local building departments. Added costs

may occur, for example, when local review of building plans is required

for identical plans already approved in a neighboring jurisdiction.

This not only adds additional direct time and monetary costs to the

builder, but indirectly may also increase the fees paid by the builder

to the local jurisdiction if the added administrative costs by the

local building department are passed on through higher fees. At the

national level building material producers and suppliers are primarily

affected by the added marketing, testing, certification, and listing

costs associated with getting their product accepted by model. State,

large city, and local code authorities. One indirect effect of these

added costs is to increase prices.

Building innovation impacts refer to a second, and perhaps more

important effect — delay in the diffusion of new building innovations.

If the building code system acts as a barrier which delays the diffusion

of new building innovations, the effects can be substantial at the

national level. This can be true even when the effects of building

innovation upon a particular building are small. An example of this

type of impact is provided by a recent study which examined the potential

cost saving in single-family houses from reduced sized venting (RSV), an innovative plumbing technology. The study estimates that RSV offers

a potential savings of $46 to $125 per single family house, depending

upon regional model code requirements and plumbing system design. Over

an eleven-year period from 1975 to 1985 the estimated savings to the

1 The degree to which such costs are passed on as higher prices depends

upon the particular market conditions of the product in question.

2 Marshall, Harold E., Ruegg, Rosalie, T. , and Wyly, Robert S., "Cost

Savings from Reduced-Sized Venting," Plumbinq Enqineer, July-Auqust

1977.

7
nation as a whole from the use of RSV was $106.5 million. This estimate

was based on a diffusion rate assumption which allowed for an increasing

(but not complete) acceptance of RSV over the period. When half the

basic diffusion rate was assumed, the estimated savings declined to

$58 million. When one-and-one-half the basic diffusion rate was

assumed, the estimated saving increased to $149 million.

One type of delay in the diffusion of an innovation occurs when

local jurisdictions are slow in revising their code. 1 This type of

delay might be reduced if some type of national product acceptance

system such as the European Agrement System were instituted.^ An

Agrement System would not eliminate other types of delay however since

building innovations can also be delayed by safety considerations which

require investigation during the standards development process. A well

known example of delay resulting from the standards development process concerns the automatic flue gas damper. The automatic flue gas damper

is a potentially energy conserving device which was first marketed in

the United States in the mid 1960's. Fuel savings in excess of 20

percent were claimed in certain circumstances. However, concerns regarding the safety of the devices have been difficult to resolve, so that

a standard for these dampers has taken over ten years to develop.

The third subcategory of building code system impacts is production

organization impacts. Production organization impacts refer to the

effects of building codes upon the structure of the building industry.

One example of this type of impact concerns the way in which the design

professions are organized. The non-uniformity of codes reinforce the

1 For a description and analysis of the many factors which affect the

diffusion of building innovations see Chapter 6 of. Ventre, Francis

T. , Social Control of Technological Innovation: The Regulation

of Building Construction, Unpublished PhD dissertation. Department of

Urban Studies and Planning, Massachusetts Institute of Technology,

1973.

p A description of the Agrement system may be found in Appendix C

of New Energy Technologies for Building: Institutional Problems

and Solutions .

3 Delay in the development of a flue gas damper standard and problems

associated with certifying flue gas dampers were first brought to

public attention in an article by Jack Anderson in October 1972.

The CBS television program, "Sixty Minutes" also contained a segment

on flue gas dampers in December 1976. The Senate Subcommittee on Antitrust and Monopoly conducted Hearings in March 1976 on Voluntary

Industrial Standards. This hearing focused upon flue gas dampers

and described the complex circumstances surrounding the delay.

8
local nature of the construction industry. 1 Perhaps the most well

known production organization impact is that non-uniform codes are one factor which may prevent cost reductions in buildings constructed using

industrialized building systems. Cost reduction may be prevented in

several ways. An industrialized builder may choose to produce all

buildings to the most stringent code provision requirements in the

market area in order to achieve economies of scale in production. One

estimate, by the Douglas Commission, placed the added direct construction costs as high as 15 percent for a manufactured home builder wanting

to market his product in a 20 State area. Alternatively, a manufacturer

could limit his market by only producing for those less stringent jurisdictions within the market area. Or, the manufacturer could adjust

the production process to produce individual buildings which meet the

requirements of each jurisdiction within the market area.

To summarize, three subcategories of building code system impacts

have been briefly described. The types of impacts described are well

known in the literature, and efforts to reform the building code system

to reduce these impacts have been a central concern of the ACIR, Douglas

Commission, and Kaiser Committee reports. While examples were given to

illustrate how building code system impacts increase costs, no attempt

was made to quantify the magnitude of these impacts. Building code system impacts are especially difficult to isolate from other equally important factors which affect the performance of the construction sector.

For example, it is clear that building code constraints are only one factor which can inhibit industrialized system building. Other technical,

institutional, and economic factors appear to be more important barriers.

Thus, even though it is possible to show that production organization

1 For example, local A & E firms are typically hired by larger outside

A & E firms due to their familiarity with the local code requirements,

their contact with local code officials, and their knowledge of other

local conditions.

^ Building the American City , p. 262.

^ See Field, Charles G. , and Rivkin, Steven R., The Building Code

Burden , Chapters 2 through 4 for an indictment of the adverse effects

of building codes upon industrialized housing.

9
impacts prevent cost reduction by industrialized builders, there is

little convincing evidence that if these barriers were removed industrialized system building would become significantly more competitive

with conventionally constructed buildings of the same quality.

2.3.2 Income Distribution Impacts

Income distribution impacts concern the way in which building codes

affect the economic welfare of specific groups in the economy.

Generally, any change in a building code, a code provision, or in

the building code system will make some groups better off and other

groups worse off. Income distribution impacts are divided into two

subcategories on the basis of the type of group affected. Producer

impacts concern the effects upon those trade/contractor/1 abor groups

supplying inputs to construction. Consumer impacts concern the effects

upon building purchasers and users.

Producer Impacts

I Building codes confer substantial benefits or impose costs on specific

producer groups. Thus, there is strong incentive for particular groups

to seek to influence code decisions. An underlying assumption of this

discussion is that the affected groups compete with each other to

influence building code decisions in order to maximize their incomes.

Influence can be exerted in several ways: by political lobbying of

legislative bodies, by participation in voluntary standard or model

code groups, or by providing advice or technical information to building code decision makers.

The most extensive information available concerning the influence of

interest groups at the local level comes from a survey by Field and

1 Industrialized building systems have only been partially successful

in Europe (where building regulations are more uniform than in the

U.S.) under a set of special conditions which favored their adoption.

For a description of the many problems associated with industrialized

systems see: Terner, I.D., and Turner, F. C., Industrialized Housing:

The Opportunity and the Problem in Developing Areas , U.S. Department

of Housing and Urban Development, Washington, D.C., 1972.

p This assumption forms the basis of one economic theory of regulation.

A description of this theory is contained in: Posner, R. A., "Theories

of Economic Regulation, " Bell Journal of Economics and Management

Sc i ence , Vol. 5, No. 2, Autumn 1974, pp. 335-358.

10
Ventre of local building departments.^ The data from the survey have

been analyzed by Ventre, and by Field and Rivken.

2

Field and Rivkin

stress the influence of local interests relative to outside interests.

They contend that local building interests use building codes to restrict

the introduction and diffusion of innovations into the local market.

They argue that this use of building codes is analagous to the national

use of tariffs and quotas to restrict foreign competition. Ventre

however, argues that this tariff analogy generalization cannot be carried

far, and that it may only apply in a limited way to the marketing of

manufactured housing. Ventre emphasizes that:

Analysis of the participation of industry elements

in the decision to modernize the local building code

reveals that not only does “everyone want to get into the

act" but that the extent and nature of that participation

of most of the actors alternate from high to low, pro to

con, varying with the specific technology under review.

Ventre's analysis supports the conclusion that although unions generally act to restrict the introduction of new, more progressive building

code provisions, local building firms generally act to support such

provisions. He also finds that the degree of support or resistance

to change by each type of interest group varies by the type of change

being considered. The competition between interest groups is characterized by shifting coalitions and a fragmentation of power. No one

1 Field, Charles G. , and Ventre, Francis T. , "Local Regulation of

Building Agencies, Codes, and Politics," Municipal Yearbook 1971 , Washington, D.C., International City Management Association.

Oc Ventre, Francis T., Social Control of Technological Innovations:

The Regulation of Building Construction ; Ventre, Francis T., '*Deci si onAidi ng Communications in the Regulatory Agency: The Partisan Uses

of Technical Information" in Research and Innovation in the Building

Regulatory Process : National Bureau of Standards Special Publication

473, Washington, D.C., 1977; Field, Charles G. and Rivkin, Steven

R. , The Building Code Burden .

This is one of the major themes of Field and Rivkin's The Building

Code Burden . Chapter 4 develops this theme.

4

Ventre, Francis T., Social Control of Technological Innovation:

The Regulation of Building Construction , pp. 219-224.

^ Ibid . , p. 353.

11
interest group appears to be uniformly successful in influencing code

decisions in their favor.

Ventre's findings that unions generally act to restrict while local

building firms act to support more progressive local building code

decisions is confirmed by an econometric study by Oster and Quigley.

All of the studies described above find other factors (such as the

education level of the chief building official, the region, the type

of jurisdiction, and the degree of professional contact with other

professionals and with model code associations) to be important in

the local building code decision-making process.

Less information is available concerning the influence of interest

groups at the national level. The information available suggests that

trade associations are very active at this level. A study for the

Douglas Commission by Mahaffey gives one example of this type of

act ivi ty

During the 1967 convention of the International Conference

of Building Officials (ICBO), 161 proposed code changes were

considered. Of this number, 68 were proposed by code enforcement officials, 50 were instigated by the trade associations and

43 came from professional groups. Thirty-four model code changes

(out of 161 proposed) were approved by the voting membership.

Sixteen of the changes approved were instigated by code officials,

17 were originated by trade associations and only one of those

approved came from the professional groups.

Trade associations were particularly successful in this example.

Although they submitted only 31 percent of the proposals, half of the

proposals approved were originated by trade associations.

1 Ventre's general conclusions are developed in some detail, especially

in Chapters 4 and 6 of Social Control of Technological Innovation:

The Regulation of Building Construction.

p Oster, Sharon M. and Quigley, John M., "Regulatory Barriers to the

Diffusion of Innovation: Some Evidence from Building Codes," The Bell

Journal of Economics , Vol. 8, No. 2, Autumn 1977, pp. 361-377. The

study uses data from the Field and Ventre Survey as well as independent

data on the degree of unionization and on local building firm size.

o Mahaffey, C. T. , A Special Study on Building Codes , Background

Paper No. 18 for the National Commission on Urban Problems,

Washington, D.C., 1968, pp. 3-7.

12
Trade associations are also very active on the standard committees

of the voluntary standards organization. These standards are referenced

in building codes. Critics of the voluntary standards system contend

that dominance by trade or industry groups may lead to anticompetitive

practices, or to standards which are not set at the optimal level.

Consumer Impacts

This subcategory of Income distribution impact concerns the impact

on building purchasers and renters of the increase in construction

costs due to building codes. A building code sets one level of protection, but this level may be "too high" for low-income families on limited budgets to purchase new housing. If building codes increase

the price of new housing then the long run impact is to reduce the

supply of new housing. This leads to a complex set of indirect effects

and substitutions which may occur both within and outside of the

housing market. In some housing markets the very poor may compete

with higher-income families for existing houses, or may be housed

in unsafe or unhealthy units which might otherwise be abandoned.

Some low/middle-income families may no longer be able to purchase

new houses, or may do so by leaving less of their budget available

for other goods and services.

If strong emphasis is placed on building safety fewer resources

are available for other goods and services, including investment in

other safety programs. Several researchers have suggested that more

lives could probably be saved by investing the same resources in areas other than building codes or regulations. For example, one researcher roughly computes that traveling is 14 times as dangerous

per person hour as occupying buildings, and that a person is about

200 times more likely to die of disease than from a building accident.

Another study roughly estimated that strict enforcement in existing

hospitals of the Life Safety Code of the National Fire Protection

Association would cost $12.7 to $63.5 million for each potential

* Very little research concerning the voluntary standards system has

been accomplished. The only major economic study is David Hemenway's

Industrywide Voluntary Product Standards , Ballinger Publishing Co.,

Cambridge, Mass, 1975. See his Appendix B and C for a critical

evaluation of the membership of two specific standards committees,

and Chapter 9 for a summary of his major findings.

O'Hare M., "Structural Inadequacies in Urban Environmental Management," Regional and Urban Economics , Vol. 3, No. 1, 1973, pp. 63-82.

13
year of life saved. In contrast, kidney dialysis was estimated to

cost about $20,000 per potential year of life saved.

2.3.3 Benefit-Cost Impacts

Benefit-cost impacts concern the positive and negative effects

of a building code or a code provision on society as a whole. Benefits

are defined as the positive impacts while costs are defined as the

negative impacts of a code or a code provision. It is important

to make the distinction between benefits and costs clear, because the

classification of a particular impact as a benefit or as a cost

is a definitional question. For example, where a code provision is

proposed to give additional protection against a building hazard,

a primary benefit (positive impact) is the reduction in the risk

of loss from that hazard. A primary cost (negative impact) is the

added resources (primarily construction costs) needed to comply with

the code provision. In contrast, when a code provision is proposed

to allow new or innovative building technology, the primary benefit

intended may be an increase in quality or a reduction in construction

costs. However this expected benefit may be only obtainable by

increasing the risk of loss from a building hazard (a cost). Thus,

a change in risk or a change in construction cost can be either

a benefit or a cost. A decrease in risk or construction cost is

treated here as a benefit. An increase in risk or construction cost

is treated here as a cost.

It is important to understand that this category concerns social

benefits and costs. That is, the concern is for the positive or negative impacts upon society (the nation) as a whole. This contrasts

with the income distribution impact category concern for the impact

on groups smaller than the nation as a whole such as trade associations,

local unions, subcontractors , contractors, or building material producers. Further description of benefit-cost impacts is deferred to

section 3, which proposes an assessment approach to evaluate the

benefit-cost impacts of single code provisions.

1 Feeley, Rich, Chapman, Diana, and Fielding, Jonathan F., "Structural

Codes and Patient Safety: Does Strict Compliance Make Sense?,"

American Journal of Law and Medicine , Vol. 3, No. 4., Winter 1977-

78, pp 447-454.

14
3.0 ASSESSING BENEFIT-COST IMPACTS

This Section presents an approach to evaluate the potential benefit

and cost impacts of specific building code provisions. The approach

is a systematic technique which may be useful to building officials,

legislators, or other members of the building community concerned

with building code decisions. Its purpose is to aid decision makers

by providing a framework to assemble and organize available or easily

obtainable information. The approach can be used to estimate some

of the potential benefit or cost outcomes of a building code decision,

but it recognizes that information is often uncertain so that exact

estimates cannot be made.

No claim is made that the methodology described in this chapter

can be applied to every code provision, nor that, once an evaluation

is made, all concerned parties will reach the same conclusion. It is not a substitute for the need to make judgments or achieve consensus

in the decision process. However, the approach can contribute to this

decision process by helping to define objectives and alternatives,

by focusing on key issues, and by reducing uncertainty. Each step

is explicit and its assumptions are clearly spelled out.

The assessment approach involves six general steps. They are:

° Define the problem and clarify the objectives

° Identify alternatives

Identify the benefits and costs to be considered in the

analysis

° Estimate the annual benefits and costs

° Peform the analysis

° Assess the results

The assessment approach based upon these steps is designed to be

used primarily to evaluate a proposed code provision change to assess whether it is desirable to accept or reject the proposed change.

It can also be used to evaluate "how much" ( i • e . , the level or scope

of application) of a particular type of code protection is desirable.

For example, it could be used to evaluate the expected outcomes of

requiring one, two, or three smoke detectors for a given area to

be protected. Finally, if a number of different proposed code changes

are evaluated, the approach can be used to rank the desirability

of the different proposed changes. An example of the "ranking" type

of decision might be whether to accept a proposed change concerning

fire safety such as a sprinkler requirement or accept a proposed

change concerning safety from electric shock such as a grounding

requi rement.

15
The approach is also helpful for evaluating code decisions which

involve significant interdependencies. Interdependencies occur if the

approval of one code provision will affect the benefit or cost impacts

of other code provision changes being considered. For example both

smoke detector requirements and flame spread requirements would be

expected to reduce fire deaths. However, approval of one requirement

will affect the number of lives which might be saved by the other.

When there are only a few interdependent code provision changes being

considered, each provision can be first evaluated independently of

the others and ranked. If the highest ranked provision is approved,

then the remaining provisions can be reevaluated to account for changes

in benefits and costs.

The specific assessment approach presented here is not intended

for use in evaluating energy conservation codes. Detailed treatment

of factors particular to energy conservation is beyond the scope of

this study, but is available from other research. 1

The remainder of this section describes in turn each of the six

steps in the assessment approach. Section 4 presents a case study

to illustrate how the approach can be applied in practice.

3.1 DEFINING THE PROBLEM AND CLARIFYING THE OBJECTIVE

It is easy to define the general objective of building codes

as the protection of public health, safety and general welfare. It is often more difficult to relate a code provision to a particular

health, safety, or general welfare problem. An initial requirement

then, is defining the specific objectives of the code provision.

Ideally, the code language should be as precise, complete, and unambiguous as possible. Requiring precise language does not imply a rigid

prescriptive code. Rather, the code provision should be worded in

such a way that its meaning, intent, and application is clear. A

clear understanding of what is to be analyzed is essential. The

assessment process, which identifies and measures the potential

benefits and costs, can help to define the specific objectives of

the code provision.

1 See Petersen, Stephen R., The Role of Economic Analysis in the

Development of Energy Standards for New Buildings . National

Bureau of Standards Interagency Report 78-1471, May 1978 for an economic analysis approach to develop a national energy conservation standard. See Ruegg, Rosalie T. , McConnaughey , John S.,

Sav, G. Thomas, and Hockenbery, Kimberly, Life-Cycle Costing:

A Guide for Selected Energy Conservation Projects for Public

Bui 1 di ngs National Bureau of Standards Building Science Series

113, June 1978 for an approach to evaluate specific energy

conservation measures in buildings.

16
Once the proposed code provision change is defined, it is

necessary to find a common base for evaluation. The effect of a code provision depends on the specific design used to comply with

the provision. Therefore to assess its impact, it is necessary to

choose a typical design which incorporates the proposed code provision

change. When the code provision applies to more than one building

type or allows more than one method to meet the requirement, additional

designs are needed. For a performance based code, typical designs

could be based upon a manual of accepted practice.

3.2 IDENTIFYING THE ALTERNATIVES

Normally, many alternatives to a code provision can be identified.

Selection of the alternatives to be considered should depend upon

the level at which the decision is being made, and upon the range of

feasible alternatives.

To illustrate the problem of selecting alternatives, consider

fire safety. Many alternatives other than building codes can protect

the public from building fires. At the national level, sponsoring

fire research, providing subsidies for local fire protection services,

regulating or reducing consumption of cigarettes, or establishing

a fabric f 1 armiabi 1 ity standard are some of the alternatives to building

code provisions. However these alternatives are often outside the

range of feasible alternatives for building code decision makers. At

the local level, purchasing better fire equipment, building more fire

stations, increasing the resources available for inspection and enforcement of existing regulations, or conducting a public education campaign

are some of the alternatives to building code provisions. They are often within the range of feasible alternatives to local decision

makers.

The purpose of raising this issue is not to propose that building

code decision makers compare the benefit and cost impacts of each

building code provision with all other types of action which society

might take to save a life, avert an injury, reduce illness, or prevent

property damage. The specific assessment approach developed in this

study is generally not appropriate for evaluating non-building code

alternatives. The issue is raised to alert building code decision

makers to be aware of non-building code actions which may be effective

alternatives to building codes. When these actions are within the

feasible range of alternatives, an assessment of these alternatives

may also be appropriate.

The choice of alternatives for evaluating proposed building code

provision changes depends upon how the assessment approach is used.

When the assessment approach is used to evaluate whether a change

should be accepted or rejected, the only alternative considered is

the existing building practice. Typical designs which incorporate

the proposed change are compared to typical designs without the proposed

17
change. When the assessment approach is used to evaluate "how much"

of a particular code provision is desirable, the alternative levels

of protection are specified. Typical designs for each level are developed and compared against each other, and with typical designs

for the existing building practice.

3.3 IDENTIFYING THE BENEFITS AND COSTS

3.3.1 Benefits

Any positive impact of a proposed building code provision is a benefit. Benefits can be divided into primary benefits and secondary

benefits. Primary benefits can be thought of as those positive impacts

which the provision is intended to produce directly. The most important

type of primary benefits concern safety. They are reductions in the

loss of life, injury, and property damage from building hazards.

Other benefits such as lowering construction costs or improving

the usefulness of the building are also important. Sometimes the

benefits are intended for a specific type of building occupant or user such as the handicapped. At other times, code provisions may

be proposed to deal with a particular problem such as historic

restoration.

Secondary benefits are positive effects which are induced or indirectly generated by a code provision. For example, the secondary

benefits of a requirement for a sprinkler or a smoke detector system

may be a reduction in the need for fire insurance, or a reduction

in the need for fire protection services. A somewhat different

example concerns indirect effects in the building supply industries.

Occasionally, a code provision may help to create a large new market

for a specific product (for example smoke detectors). This large

market may in turn induce cost-reducing product development, or economies of scale in production. Even more indirect and elusive

are psychological or environmental (quality-of-life) benefits which

may accrue to building owners or occupants.

3.3.2 Costs

Any negative impact of a proposed building code provision is a cost. Like benefits, costs can be divided into primary costs and

secondary costs. Primary costs are the added labor, equipment, materials, and other compliance costs which directly result from the

code provision change. Another important type of primary cost which

may occur when new construction cost-reducing technology is proposed,

is any added risk to safety which the new technology might introduce.

Secondary costs are negative effects which are induced or indirectly

generated by a code provision. They are often subtle, hard-to-measure,

indirect costs which result from the code provision's influence on

18
design, human behavior, or industry practice. For example, false

alarms by smoke detectors may induce heart attacks or injuries

if emergency egress is attempted. False tripping of electric circuits

by Ground Fault Circuit Interrupters (GFCI's) or false alarms by

smoke detectors may encourage some homeowners to remove the devices

themselves, thus exposing them to a shock hazard. A code provision

requiring sprinkler systems in high-rise buildings on some occasions

may induce owners, designers, or developers to choose to build low-rise

rather than high-rise buildings. This may affect safety as well

as construction costs (for example by increasing the risk of stair

accidents). As a final example consider the egress requirements

for travel distance to an exit in hospitals. Since exits take room

which might otherwise be used for treatment a difference in the

travel distance to exit requirement may induce change in design,

say from a two story to a three story hospital. Even if this type

of design change were predictable so that the difference in construction cost of the two designs could be estimated, other more subtle

cost changes might also occur. For example, the productivity of

doctors and nurses might change (one design might require more time

to transfer patients, or additional nursing stations might be needed).

3.4 ESTIMATING THE ANNUAL BENEFITS AND COSTS

In practice, it is not possible to measure accurately all the

benefits and costs identified with a specific building code provision.

Part of this measurement problem is inherent in the very nature

of construction, since buildings serving the same function are unique

in many characteristics such as design, size, location, or materials

used. Another part of this measurement problem is due to imprecise

or incomplete code language which allows substantial latitude for

interpretation and enforcement in different code jurisdictions. A third

reason for this measurement problem is that statistics on building

safety are imprecise, not available, or not in a form which can

be easily used. Another reason is that some benefit and cost impacts

are intangible; that is, although they can be identified, there is no known or accepted method available to measure their magnitude.

Finally, assessing code provisions takes resources. Even if it were possible to measure more accurately certain impacts through extensive

research, the added degree of precision may not be worth the added

time or money expense.

Even though not all benefit and cost impacts are easily measured,

useful assessment can still be accomplished. In this assessment

approach, potential benefits and costs can be evaluated using information having different levels of reliability and precision. Available

information is often the only assessment information needed. The

approach assumes that some of the information used to estimate

benefits and costs is uncertain.

19
To estimate annual benefits and costs it is first necessary to

establish a base period for the analysis and to determine the number

of buildings affected by the code provision.

The base period year is the starting point for the assessment.

Usually the base period is one or two years before the code provision

change is intended to become effective. For example, a code provision

change which is to become effective in 1978 may have a base year

of 1977 or 1976, depending upon the availability completeness of the

benefit and cost information.

A major element in the assessment approach is determining the

number of buildings to be protected relative to the total number

of buildings in which the losses occur. Since the building codes

are not national in scope and vary from one code jurisdiction to

another, a simplifying assumption concerning the number of buildings

to be protected is needed. The assumption made is that the code

provision is a mandatory requirement for all buildings constructed

in the base year . Since building construction is subject to building

cycles, an average of at least five years is preferred to a single

year estimate of the number of buildings constructed in the base year.

An example can illustrate the use of this approach. Suppose a code provision which applies to all residential construction is to

become effective in 1976. Between 1971 and 1975 an average of approximately 1.7 million private single and multi-family units were built.

Using 1975 as the base year, assume that 1.7 million residential

units were constructed in 1975 which incorporated the proposed code

provision. If the total stock of residences in 1975 was about 72

million then the number of buildings protected relative to the total

number of buildings is about 2.4 percent (1.7/72 = .0236).

1

I n this base year approach, only the potential benefits and costs

which result from compliance with the code provision in the base year

are evaluated. An alternative approach is to estimate the actual num- ber of buildings which are affected by the code provision in each year

the provision is expected to be in effect. This alternative approach

provides estimates of the total benefits and costs associated with the

code provision which are not provided by the base year approach. However, the base year approach is suggested for decision making because

the alternative approach is more complex, requires more data, and may

be subject to greater uncertainty due to the need to forecast diffusion

rates and the future number of buildings constructed.

9 See the Ground Fault Circuit Interrupter Case Study in Section 4

for sources of these types of statistics.

20
3.4.1 Changes in Safety

The basic steps used for estimating changes in the level of

safety are to:

° determine the annual loss

° determine the effectiveness of the code provision in

averting the loss.

Determining the Annual Loss

Sometimes a code provision will affect only one type of hazard

and one type of loss. Often however, more than one type of hazard

and loss may be affected. A decision tree, illustrated in Figure

3.1, may be helpful to insure that all relevant hazards and losses

are considered. The decision tree shows the set of probable outcomes

which can occur from a building code provision decision. Whether or

not the code provision is in effect, there are only two outcomes

-- either a hazardous event occurs or it does not. For clarity, only

one branch showing the loss outcome is illustrated in Figure 3.1.

Several of the more important types of hazards (Fire, Natural Disaster,

Accident) and losses (Death, Injury, Property Damage) are illustrated.

In practice, a more comprehensive decision tree which shows the specific

types of hazards and losses affected may be necessary. 1

Once the types of specific losses have been listed, an estimate of

the annual loss is made. Much of this information is published, but

the source, level of detail, and accuracy vary with the type of hazard

being investigated. For example. Accident Facts published annually

by the National Safety Council and Vital Statistics of the U.S.

published annually by the U.S. Department of Health, Education and

Welfare provide information on accidents. The National Fire Protection

Association (NFPA) publishes annual estimates of fire loss (deaths

and dollar property loss) in the Fire Journal . The National Fire

Prevention and Control Administration (NFPCA), U.S. Department of

Commerce, is also beginning to publish fire loss information.

Some losses can be measured in dollars, some can be quantified

but not in dollars, and some may be intangible. The minimum information

needed for estimating death or injury losses is the annual number

of deaths and injuries. Additional information concerning age, sex,

1 For one example see, Buchbinder, Benjamin, Helser, Susan G. , and

Offensend, Fred, Preliminary Report on Evaluating Alternatives for

Reducing Upholstered Furniture Fire Loses , National Bureau of

Standards Interagency Report 77=1381, November, 1977.

21
DECISION

TREE

22

ACCIDENT

TlNJURY
location, circumstances of occurrence, frequency and severity of injury,

and dollar expenses such as medical costs should also be collected

if available. Property damage information is normally measured in

dollars. For natural disasters, the above information should be

linked with geographic factors.

Determining the Effectiveness of the Code Provision

Loss information and the basic assumption concerning the number of

buildings protected is first used to estimate the loss in the base year

which might be averted by the code provision if the provision were completely effective. To continue the above example, assume there are about 6000 fire related deaths in residences each year. If a code

provision requirement which could prevent all fire deaths in residences

was mandatory in 1975, then at most 144 fire deaths in that year

could be averted (6000 x .024 = 144). This assumes that losses are evenly distributed between new buildings and existing buildings.

But code provisions are not expected to eliminate all risk of

loss. Many aspects which affect loss outcomes are not influenced by

codes. For example, a code provision intended to prevent fire loss

may not be totally effective against an arsonist. A smoke detector

may not be effective in reducing loss of life (even if it works

properly) for persons under the influence of drugs or alcohol. An

exit required by codes for emergency egress may be locked. A building

designed to meet structural requirements for a low seismic risk area

may not withstand a major earthquake.

To estimate the actual effectiveness of a code provision, some understanding is necessary of how building hazards and losses from

building hazards occur, and how the code provision works to reduce

the risk of loss. Often standards research or engineering/testing

studies are available to provide information about how the code

provision is to work. Less is known about causation, or the chain

of events which lead up to hazards and losses.

One problem is that events which lead to death, injury, or property damage are complex. For example, what is the cause of death

if a person falls from a ladder after receiving an electric shock from

a power tool? Is the death due to a fall or electric shock?

Despite these difficulties, sufficient information is usually

available to perform analysis. One primary source of information

^See Sav, G. Thomas, Natural Disasters: Some Empirical and Economic

Considerations ; National Bureau of Standards Interagency Report 74-473,

February 1974, for a description of natural disaster losses.

23
has been to examine case studies or investigate hazardous events to

identify common patterns. Other primary sources of information are the

technical studies, field tests, and documentation used for standards

development or to support code provision change proposals. Generally,

no one data source or study contains all the necessary information

regarding a particular type of hazardous event.

One factor which is often very important in determining the

effectiveness of a code provision concerns the initial assumption that

losses are equally distributed between new and existing buildings. The

code provision applies to new buildings, but the loss statistics are based upon losses in the existing building stock. Often more losses

would be expected in older buildings than in newer buildings. For this reason the initial assumption that losses are proportionally distributed

between new and existing buildings may often need to be adjusted in

the analysis.

The effectiveness of the code provision can be analyzed for each

type of loss (death, injury, property damage) for which annual loss

data exists. The result of this analysis is an estimate of the annual

loss averted for each type of loss in the base year. The case study

in Section 4 illustrates how the effectiveness of the code provision

can be analyzed using diverse data sources.

3.4.2 Changes in Construction Costs

The basic steps for estimating changes in construction costs are:

° Develop typical designs

Estimate construction cost changes from the typical designs

Estimate the total change in construction costs for the base

year

Developing Typical Designs

The type and number of typical designs needed to establish a common base for evaluation depend primarily upon the characteristics

of the buildings to which the code provision applies. The type and

number of designs developed may also depend upon the level of com- plexity desired in the analysis. Sometimes the size of the building

or the number of stories may be important, so that separate designs

on the basis of these criteria may be appropriate. In other circumstances, typical designs may be based upon the type of building (single

family detached, row houses, multi-family hi-rise), the type of material

used (masonry, structural steel, reinforced concrete), or the type

of construction practice used (prefabricated or conventional on-site).

24
Regional differences in building characteristics are also important

in choosing typical designs.

Estimating Changes in Construction Cost from Typical Designs

Several methods can be used to estimate construction cost changes

from the typical designs. The most common methods are either to use an established cost estimating guide, or to obtain specific estimates by

professional cost estimators. Sometimes it may be possible to examine

actual cost information gathered from construction sites. Whichever

cost estimating method is used, it is important to specify the steps

taken to arrive at a final dollar figure. For most methods of cost

estimation this means that, whenever possible, both physical measures

and price information are needed. Materials should be listed by type

and quantity. Each labor skill or type of major equipment (excluding

hand tools) should be measured in terms of time. The material prices,

wage rates, equipment rental fees, and overhead/profit charges used to

arive at the dollar estimate should be specifically identified.

Estimating the Total Change in Construction Costs for the Base Year

Once the cost estimate for each typical design is completed, it is

multiplied by the number of buildings assumed to use that design in

the base year. Then the total cost for each typical design is added

to obtain the total change in construction costs for the base year.

3.5 PERFORMING THE ANALYSIS

It would not be reasonable to evaluate a code provision on the basis

of estimates of the initial benefits and costs in the base year alone.

Three additional steps are needed to complete the analysis. They are:

° Estimate the effective useful life of the technology

required by the code provision

Estimate the potential benefits and costs over the effective

useful life

° Develop measures which compare the benefits and costs

3.5.1 Estimating the Effective Useful Life

Since buildings are durable, the benefit and cost impacts of the

technology required by a code provision need to be evaluated over time.

With regard to safety, a code provision may protect against death,

injury or property damage for many years. But over time, for a variety

of reasons (such as aging, fatigue, poor maintenance or repair, etc.),

the code provision may lose its effectiveness to protect against

hazards. Generally, there is no simple way to predict rates of failure

25
to determine the change in effectiveness over time.* The approach

recommended in this study is to estimate an "effective useful life"

for the code provision. Sometimes manufacturers' studies or laboratory/

field tests may provide information on durability or reliability for

making an estimate of the effective useful life. Often reliable information is not available. In this case, when there is uncertainty asso- ciated with the estimate, sensitivity analysis is also recommended.

3.5.2 Estimating Potential Benefits and Costs Over the Effective Useful

Life

Deaths and Injuries

The base year estimate of the change in the number of deaths and

the number of injuries are assumed to be constant over the effective

useful life. To estimate the total deaths/injuries averted, the base

year estimates are multiplied by the effective useful life. For example, assume that a code provision is estimated to avert 2.5 deaths and

7 injuries in the base year. Then for a 20 year life, the code provision

will potentially avert 50 deaths (2.5 x 20 = 50) and 140 injuries

(7 x 20 = 140).

Dollar Measures of Benefits and Costs

Benefits or costs measured in dollars which occur after the base

year must be converted to a common base year dollar measure. The

process of converting future dollar benefits or costs to a common time

is called discounting. Discounting is necessary because money has a time value. Money today can be invested to earn a return. Money

received in the future has less value than the same amount received

today. For example, $1 today is worth $1.10 one year from now at

a interest (or discount) rate of 10 percent. Conversely, $1.10 received

one year from now is worth only $1.00 today.

Future benefits or costs can be discounted using discount formulas

or factors. The result obtained from discounting is called a present

worth (or present value). Table 3.1 gives the appropriate present

worth factors for a 10 percent discount rate. The discount formulas.

^There are statistical methods which may be possible in some cases. See,

Apostolakis, G., Mathematical Methods of Probabilistic Safety Analysis , prepared for National Science Foundation, Washington, D.C., Research

Applied to National Needs, University of California, Los Angeles, Sept.

1974.

oThis approach assumes that all deaths averted are of equal value to

society. No distinction is made between averting the death of a child

or an adult, a male or female.

26
TABLE 3.1

PRESENT WORTH FACTORS FOR A DISCOUNT RATE OF 10%

Uniform Si ngle

Present Present

Worth Worth

Year Factor Factor Year

1 0.909 0.9091 1 2 1.736 0.8264 2

3 2.487 0.7513 3

4 3.170 0.6830 4

5 3.791 0.6209 5

6 4.355 0.5645 6

7 4.868 0.5132 7 8 5.335 0.4665 8

9 5.759 . 0.4241 9

10 6.144 0.3855 10

11 6.495 0.3505 11

12 6.814 0.3186 12

13 7.103 0.2897 13

14 7.367 0.2633 14

15 7.606 0.2394 15

16 7.824 0.2176 16

17 8.022 0.1978 17

18 8.201 0.1799 18

19 8.365 0.1635 19

20 8.514 0.1486 20

21 8.649 0.1351 21

22 8.772 0.1228 22

23 8.883 0.1117 23

24 8.985 0.1015 24

25 9.077 0.0923 25

27
and the discount factors for other discount rates and periods of time

are available in standards engineering economics texts.

The uniform present worth factor is used when the dollar value of

benefits or costs are assumed to be uniform, occurring each year of

the effective useful life. It is likely that most dollar benefits or costs which have base year estimates (such as property damage averted,

medical costs, routine operating, maintenance and repair costs) can be

treated as uniform recurring dollar amounts. To obtain a present worth,

simply multiply the appropriate uniform present worth factor by the

base year estimate. For example, if the base year estimate of property

damage averted is $2 million, and the effective useful life is 20

years, only two steps are needed to compute the present worth. First,

the uniform present worth factor is obtained, which in this example

is 8.514 (from year 20, Column 1 of Table 3.1). Second, this is multiplied by the base year estimate to obtain a present worth of about

$17 million (8.514 x $2 = $17,028,000).

The single present worth factor is used if non-uniform dollar costs

occur during the effective useful life. The following example illustrates how to calculate a present worth using single present worth

factors. Assume that smoke detectors have an effective useful life of

10 years, and that battery operated detectors need batteries every two

years. If there are 500,000 battery operated smoke detectors installed

in the base year, and the base year price of batteries is $2, then the

battery replacement cost is estimated at $1 million. The single present

worth factors for years 2, 4, 6, 8, are each multiplied by $1 million

and the present worths are summed. For this example the present worth

is $2.6 million [(.8264 x $1,000,000) + (.683 x $1,000,000) + (.5645 x $1,000,000) + (.4665 x $1,000,000) = $2,600,400].

The discount rate chosen in this example is the 10 percent real

rate used by the Federal government to evaluate government investment.

3.5.3 Developing Measures for Comparing Benefits and Costs

If all benefits and costs are measured in dollars, a number of

different criteria can be used for comparing benefits and costs. When

the purpose of the analysis is to determine "how much" (i.e., the

level or scope of application) of a particular type of code protection

is desirable, then maximizing net benefits (total benefits minus total

1 See for example. Grant, Eugene L. and Ireson, W. Grant, Principles of

Engineering Economy , 5th ed. (New York: The Ronald Press Co., 1970).

o See Office of Management and Budget, Executive Office of the

President, Circular No. A-94 (Revised), March 27, 1972.

28
costs) is an appropriate measure.* When there is a "ranking" type

of decision to select a limited number of code provisions, a benefitcost ratio may be a more appropriate measure.

However there will seldom be a case when all benefits and costs

are easily measured in dollars. Often the most important benefits are the number of deaths and injuries averted. An approach is needed which

allows comparison of benefits and costs which are measured in both

monetary and non-monetary terms.

The preferred approach would be to estimate a current and future

dollar value for the deaths and injuries averted. Then, standard benefit cost criteria could be used. Unfortunately, most of the existing

methods used to put a dollar value on lives saved or injuries averted

are not consistent with the economic theory which underlies benefit-cost

analysis.

A simpler variant of this approach is to assign standard dollar

values for deaths or injuries averted. However, the central problem

of selecting the proper set of standard values which are acceptable

to decision makers remains. Promising theoretical and applied economic

and behavioral research based upon concepts which are more consistent

with benefit-cost analysis is being conducted. 4 This research may

eventually result in adequate methods to estimate dollar values which

are acceptable to decision makers.

*See Chapman, Robert E. and Colwell, Peter F., Economics of Protection

Against Progressive Collapse , National Bureau of Standards Interagency

Report 74-542, September 1974 for an economic model which describes

this concept.

2 See Mishan, E. J., Cost-Benefit Analysis: An Introduction , New York,

Praeger, 1971, or Dasgupta, Ajit and Pierce, D. W. , Cost-Benefit

Analysis: Theory and Practice , New York, Harper and Row, 1972 for

a thorough description on the uses of Benefit-Cost analysis for

deci sion maki ng.

•*For excellent summaries of the various measurement approaches and their

deficiencies see, Mishan, E. J., "Evaluation of Life and Limb: A Theoretical Approach," Journal of Political Economy , July-August 1971,

pp. 687-705; or Jones-Lee, M. W., The Value of Life: An Economic

Analysis , University of Chicago Press, Chicago, IL, 1976.

^Recent economic literature has focused on the wi Hi ngness-to-pay

approach. Behavioral literature has focused upon evaluating attitudes

towards risks. See Clark, E. M. and Van Horn, A. J., Risk-Benefit

Analysis and Public Policy: A Bibliography , Energy and Environmental

Policy Center, Harvard University, November 1976, for citations.

j

29
The approach proposed here is to develop ratios which estimate

how much a code decision will cost society to save one life. In this

approach, the net dollar cost is divided by the estimated total number

of deaths averted over the code provision's useful life to obtain a "cost per life saved" statistic. This approach assumes that deaths

averted in the future are of equal value to society as deaths averted

in the present.

To illustrate the concept, assume that a code provision will avert

30 deaths, 900 injuries, and a total of $50 million of property damage

(in base year present worth dollars) over a 20 year life. The initial

added construction costs to incorporate the code provision requirement

in the base year is $150 million. Since the property damage averted

(a benefit) is in base year dollars, it can be subtracted from the

initial added construction costs to obtain a net cost (dollar costs

- dollar benefits) of $100 million. The "cost per life saved" is

$3.33 million ($100 million/30 deaths averted = $3.33 million per

life saved). In comparing two alternative code provisions, the provision having the lowest cost to save a life is preferred. Note that

all benefits and costs measured in dollars are combined to form a net cost. If dollar benefits exceed dollar costs then a code provision

is already cost effective using standard benefit-cost criteria. For

these measures the net cost has a negative value, and the comparison

rule that the code provision having the lowest "cost per life saved"

is preferred still applies.

A similar ratio can be calculated for code provisions which are proposed to reduce initial construction costs but which may introduce

a small added risk of death or injury. The statistic is formed by

dividing the net dollar benefits (dollar benefits - dollar costs)

by the estimated total number of added deaths over the useful life.

In comparing code provisions of this type, those provisions having

higher ratios are preferred.

To evaluate injuries both the frequency and the severity of the

injuries averted should be considered. When severity information

is not available (as in the above illustration) the number of injuries

averted can still be considered. For example, in the illustrative

example above, there are 30 injuries averted for each death averted.

The "cost per life saved" ratio can also be considered the cost to

1 T h i s assumption means that the "value" of a death averted in the

future is not discounted to be the present. Although It is also

reasonable to assume that a life saved in the present is of more

value than a life saved in the future, there are a number of problems

associated with the appropriateness of discounting to reflect this

difference. See Zeckhauser, Richard, "Procedures for Valuing Lives,"

Public Policy , Vol 23, No. 4, Full 1975, pp 419-464.

30
save one life and avert 30 injuries. This interpretation provides

added information for ranking code provisions.

If information on severity is available, one method which might

be adopted is to weight different types of losses. Several different

weighting schemes which relate losses from death to serious and minor

injuries are shown in Table 3.2

Table 3.2

Weighting Schemes

Type of Loss Weighting Scheme Number

1 2 3

Death 1 1 1

Serious Injury 1 0 .35

Minor Injury 1 0 .009

Schemes 1 and 2 represent two extremes. In Scheme 1 each type of

loss is given equal weight, while in Scheme 2 only loss of life is

given weight. Scheme 3 is intermediate, giving the most weight to death

and the least to minor injuries. The primary problem with weighting

schemes, like that of assigning standard dollar values, is the need

to develop adequate methods to estimate weights which are acceptable

to decision makers. There are several potential approaches to assigning weights. One is to ask people through interviews and surveys. A

second method might be to develop weights based upon past studies which

estimate dollar values for lives and injuries. This was done in weighting Scheme 3 using values obtained from 1975 Societal Costs of Motor

Vehicle Accidents . The Average value of a traffic fatality in 1975

*For one approach, see Lave, L. B., "Product Safety: An Economic

View," ASTM Standardization News , February 1973, pp. 14-21.

2 See for example, Kelman, S. , "Regul ation by the Numbers - A Report

on the Consumer Product Safety Commission," Public Interest , No. 36,

Summer 1974. pp. 82-102.

^Faigin, B. M., 1 975 Societal Costs of Motor Vehicle Accidents , U.S.

Department of Transportation, National Highway Traffic Safety Administration, December 1976.

)

31
was estimated to be $287,175, the value of a severe injury was $101,169, and of a minor injury was $2,576. 1 The weight for serious

injuries is calculated by dividing the average value of a serious

injury by the average value of fatility ($101,169/ $287,275 = .352).

The weighting scheme chosen can then be used to develop a loss

index. For example, if a code provision is estimated to avert 50 deaths,

200 serious injuries, and 500 minor injuries over its useful life the

loss index is the sum of the amount of each loss multiplied by its

weight. For weighting Scheme 3 the loss index is 124.5 [ (50 x 1 + 200 x .35 + 500 x .009) = 124.5)]. A "cost per loss" statistic (net

dollar cost divided by the loss index) similar to the "cost per life

saved" statistic can then be calculated. Code provisions could then

be ranked by' the "cost per loss averted," with provisions having lower

ratios preferred.

Choosing a weighting scheme makes explicit the relative weights

assigned to different types of non-monetary losses. This approach may

be preferred to the standard dollar value approach because this

explicit type of comparison between deaths and types of injuries may

be more intuitively understandable than dollar values. However, further

research is recommended to develop the weighting scheme approach more

fully before it is implemented.

3.6 ASSESSING THE RESULTS

The "cost per life saved" statistics depends upon several sets

of assumptions and estimates. The accuracy of these assumptions are subject to a good deal of uncertainty. The final step in the analysis

is to examine how sensitive the outcome of the analysis is to changes

in the basic assumptions. This type of analysis is called sensitivity

analysis. In this assessment approach, two types of sensitivity

analysis are recommended.

The first type of sensitivity analysis is to change only one assumption to see how the "cost per life saved" outcome varies with

a higher/lower value for the parameter in question. The useful life,

the change in construction costs, the effectiveness of the provision,

and the basic annual loss estimates are all examples of parameters

for which there may be a high degree of uncertainty.

The second type of sensitivity analysis is to evaluate an "optimistic" and a "pessimistic" case. For the optimistic case,

assumptions are changed which increase benefits (for example, the

^Values calculated from Table 2 of 1975 Societal Costs . Severe

injuries were calculated from AIC Code 4 and 5. Minor injuries for

AIC Code 1-3.

32
effectiveness of the code provision) or which decrease costs.

Calculating the cost per life saved using the optimistic case will

give a lower bound estimate of the cost per life saved. For the

pessimistic case, assumptions are changed which decrease benefits

or which increase costs. The "pessimistic" case will give an upper

bound estimate of the cost per life saved.

Examples of both types of sensitivity analysis are contained in

the Ground Fault Circuit Interrupter case study in Section 4.

33
4.0

GROUND FAULT CIRCUIT

INTERRUPTERS—A CASE STUDY 1

The ground fault circuit interrupter (GFCI or GFI) is a device which

is designed to protect against death and injury from line-to-ground

electric shocks. A ground fault occurs when current leaks from a voltage source to ground (such as through a person's body). If the

current flow to ground over the unintended path exceeds a certain

level (5 milliamperes for the GFCIs we are discussing), the device

rapidly opens the circuit. The 1975 National Electrical Code requires

GFCI protection at construction sites, for swimming pools, and for

certain receptacle outlets in new residential construction. This case

study examines the 1975 National Electrical Code requirement for GFCI

protection in new residential construction for all receptacles installed

outdoors and in bathrooms. The first part of this section contains

a detailed analysis of electric shock deaths, and estimates the cost

per life saved. The analysis section also briefly discusses electric

shock injuries and loss from electrical fires. Sensitivity analysis

and conclusions regarding the case study are contained in the final

portion of this section.

4.1 ESTIMATING GFCI BENEFITS

4.1.1 Electric Shock Deaths

Table 4.1 presents recent statistics for the United States on annual electric shock death in the home. These statistics are based

on information reported on death certificates. The total number of

deaths averages 289 for the five years shown. For the period 1963-1974,

the average number of deaths was 290.

^n early paper, prepared while on this research was in progress,

presented a similar GFCI case-study. However, the earlier case study

was presented for illustration of the assessment technique only and

was not based upon completed cost estimates. See McConnaughey , John

S. , "Economic Impacts of Building Codes," in Research and Innovation

in the Building Regulatory Process , National Bureau of Standards

Special Publication 473, June 1977, pp. 397-419.

p Fo r a comprehensive survey of GFCI usage, see Beausoliel, Robert W.

and Meese, William J., Survey of Ground Fault Circuit Interrupter

Usage for Protection Against Hazardous Shock , National Bureau of

Standards, Building Science Series 81, Washington, D.C., 1976.

^ See Article 210-8 of the National Electrical Code , 1975 Edition,

National Fire Protection Association, Boston, 1975.

34
TABLE 4.1

Deaths from Electric Shock in the Home

Year

Home Wiring

and Appl i ances Other Total

1970 211 66 270

1971 216 72 288

1972 206 86 292

1973 232 71 303

1974 203 80 283

Source: 1970, 1971, and 1972 editions of Vital Statistics of the

United States Vol. II, Mortality Part A, Table 4-5. U.S.

Department of Health, Education, and Welfare, National

Center for Health Statistics. The 1973 and 1974 statistics

were obtained from the National Center for Health Statistics.

35
Not all of these deaths can be potentially averted by the use of

GFCIs. The "other" cause, which represents about one fourth of the

reported deaths, includes accidents such as contact of TV antennas

or kites with overhead wires, or contact with electrical wires which

have fallen after a storm. However, the statistics presented in Table

4.1 may also understate the number of deaths in the home due to electric

shock. Some deaths may not have been recognized as due to electric

shock and may have been recorded as a heart attack or from some other

cause. Also, the location of deaths is not specified on nearly 15

percent of the death certificates reporting electric shock death. An

unknown proportion of these deaths classified as "place unspecified"

probably occurred at home, but are not included in Table 4.1.

Given the uncertainty of the actual number of deaths due to

electric shock the analysis uses an initial estimate of 290 deaths

per year. In the subsequent sensitivity analysis this estimate is

varied by about 10 percent.

4.1.2 Establishing a Base Period and Estimating the Proportion of

Building Affected

The base year used is 1975. In that year there were approximately

72 million occupied housing units. The average number of private

single and multi-family units completed from 1971-1975 was 1.736

million units. Using the assumption that GFCIs were required in the

1.736 million units, the proportion of the total occupied housing

stock protected by GFCIs is approximately 2.4 percent (1.736/72 = .0241).

4.1.3 Determining GFCI Effectiveness

The National Electrical Code only requires GFCI protection for

outside or bathroom receptacles, but electric shock occurs throughout

1 The Annual Housing Survey: 1974 Part A , U.S. Bureau of Census, U.S.

Department of Commerce, Current Housing Report Series H-l 50-74, Wash.,

D.C., 1976 estimated that there were 70.83 million occupied housing

units in 1974. There were nearly 1.3 million housing units completed

in 1975. See U.S. Bureau of Census-Series C25, Characteristics of

New Housing: 1975, U.S. Department of Commerce, Washington, D.C.,

1976.

o Calculated from Table 1 of Characteristics of New Housing: 1975 . Public housing units and mobile homes were not included in this

estimate.

36
the residence. A newspaper clipping study reported on fatal and non- fat al electric shock accidents in homes. The study provided information on 200 fatalities.

Of the fatalities, 91 (45.5 percent) occurred outdoors or in

bathrooms. The 1975 National Electrical Code requires at least one outdoor receptacle. However, one outdoor receptacle may not be adequate

for every location outdoors. It is likely that homeowners will use extension cords plugged into non-GFCI protected circuits originating

in the house. Other deaths occurring outdoors which may not be averted

by the outdoor GFCI protected receptacle are accidents involving fallen

or overhead wire.

To estimate the effectiveness of GFCIs in averting deaths outdoors

or in bathrooms an initial assumption is that 2/3 of the deaths occuring outside could be protected by GFCIs and that all of the deaths

occurring in bathrooms could be prevented by GFCIs. In the clipping

study, 62 deaths occurred outside. Using the above assumption, about

41 of those deaths could be averted by GFCIs. Adding the 29 fatalities

which occurred in bathrooms, a total of 70 out of 91 deaths (or 77

percent) are assumed preventable by GFCIs. Later in the sensitivity

analysis it is assumed that only 1/2 of the deaths occurring outdoors

would be protected by a GFCI. This gives a pessimistic estimate of

66 percent protection. For the optimistic estimate, it is assumed that

80 percent of the deaths occurring outdoors would be protected by a GFCI. This gives an optimistic estimate that 86 percent of the deaths

occurring outdoors or in bathrooms are preventable by GFCIs.

The final factor in estimating the effectiveness of GFCIs is to

note that an important difference between new residences and older residences is that all receptacles in new residences are grounded. A grounding conductor, used and maintained properly, is another method which

protects against line-to-ground shock. Since grounding is already required

in new residences, the benefit (in terms of lives saved) from GFCIs

which we need to measure is the added number of lives which the GFCI will

1 A summary of this study was submitted to the National Electrical

Code Panel which reviewed GFCI proposals. See the comment by A.W.

Smoot of Underwriters ' Laboratories which appears in Preprint of the

Proposed Amendments to the 1971 NEC , National Fire Protection

Association, Boston, p. 45.

37
save over and above lives that grounding will save. The clipping

study estimated that at most, GFCIs could potentially avert 81 percent

of the 200 the electric shock deaths examined 1

. The study also

estimated that "effective" grounding could avert 64 percent of the ( electric shock deaths examined. Using these estimates the added

percentage effectiveness of GFCIs is only 16 percent (.80 - .64 = .16) over "effective" grounding. In the clipping study, "effective"

grounding was assumed if it was possible that both the receptacle and

the electrical device plugged into the receptacle were properly grounded.

However, in practice there is evidence that grounding would not be

"effective" in the clipping study sense due to improper maintenance

or use. Moreover, improper grounding may result in some accidents which

might not otherwise occur. Since grounding is not always effective,

this case study will assume that only 50 percent of the deaths which

GFCIs could prevent can also be prevented by grounding. It was previously

estimated that 77 percent of the deaths outdoors or in bathrooms are preventable by GFCIs. If grounding could also prevent 50 percent of

these deaths, then the added effectiveness of GFCIs over grounding is

38.5 percent (.77 x .5 = .385).

The above loss estimates and assumptions can now be used to

estimate the potential number of lives saved in the base year by GFCIs.

This is the product of: (1) the annual loss (290 lives) times, (2)

the proportion of the housing stock protected (.024) times, (3) the

percentage of deaths which occur outdoors or in bathrooms (.455) times,

(4) the added effectiveness of GFCIs over grounding (.385). Performing

this multiplication, the potential number of lives saved by GFCIs in

the base year is about 1.2 lives (290 x .024 x .455 x .385 = 1.219).

4.2 ESTIMATING GFCI COSTS

There can be a wide range in the actual installation cost of GFCIs

to meet the 1975 National Electrical Code requirements. Costs will vary

due to factors such as the type of GFCI used, the ty.pe of residence,

the electrical layout of the circuits, the types of cable used, and

regional differences in wage rates and building design characteri sties.

1 A later newspaper clipping study reported a higher percentage of

overall GFCI effectiveness. This study only investigated a subset of

electric shock deaths and had a smaller sample than the first. The

data it presented is not appropriate for this analysis. See the

comment submitted by the National Electrical Manufacturers

Association in Preprint of the Proposed Amendments for the 1978 NEC , National Fire Protection Association, Boston, p. 30.

See Survey of the Ground Fault Circuit Interrupter Usage for Protec- tion Against Hazardous Shock , pp. 5-6 for a description of some of

the problems associated with grounding.

38
Three typical designs are specified: (1) Dl , a small (1200 square

foot), 1 1/2 bathroom, one-story, ranch-style unit; (2) D2, a larger

(2000 square foot), 2 1/2 bathroom, two-story, single-family unit; and

(3) D3, a small (1000 square foot), one bathroom, multi-family unit.

An electrical layout is a circuit plan grouping outlets into

circuits. To determine the most typical types of electricl layouts,

electrical trade journals, local electrical contractors in the Washington, D.C. area, and architects in a number of regional offices of the

Department of Housing and Urban Development were consulted. There are two general types of GFCI devices. The circuit breaker type is installed

in a conventional circuit breaker panelboard and protects an entire

branch circuit. The receptacle type has the GFCI built into the receptacle. The receptacle type may be either "dead end" which protects

itself only, or "feed through" which protects other receptacles further

along in the circuit. The survey of trade journals, electrical

contractors, and HUD regional offices suggests that the most common

type of GFCI used for new construction is the circuit breaker type,

and that only one GFCI is usually required. The subsequent cost

analysis assumes that one circuit breaker type GFCI is used in a typical

design.

Figure 4.1 shows the basic electrical layout for design Dl. The

panel may be either mounted on an outside wall or in a basement. The

numbers adjacent to the panel and the receptacles (encircled R's)

represent the feet of wire needed for the vertical portions of the

run plus any extra wire needed for the junction/receptacle boxes. The

numbers between the panel and the bathroom receptacle, or between two

receptacles, represent the feet of wire needed for the horizontal

portion of the run. For this design, a total of 75 feet of wire is

requi red.

Figure 4.2 shows a similar basic electrical layout for design D2.

For this design a total of 80 feet of wire is required. Both designs

Dl and D2 assume that a new GFCI protected branch circuit is needed.

For design D3 no outdoor receptacle is assumed to be required. It is

also assumed that a new GFCI protected circuit is not required.

Instead, it is assumed that a circuit breaker type of GFCI replaces

1 Receptacle type GFCIs appear to be the most common type used for

rehabilitation. They are also used extensively in new construction.

Manufacturers of each type of GFCI claim their device is least

costly to the electrical contractor. Proponents of the receptacle

type, which costs more to purchase than the circuit breaker type

stress fewer callbacks due to nuisance tripping and savings in

installation costs.

39
40

ft.

40

Figure

4.1

DESIGN D

1:

1200

Sq.

Ft.

RAMBLER
Stcond

Flsor

First

Floor *

tio> CM

41

Figure

4.2

DESIGN

D2:

2000

Sq.

Ft.

TWO

STORY
a regular circuit breaker on the normal circuit which contains the

bathroom receptacle. Under these assumptions no major additional

changes in wiring are necessary, and an electrical layout diagram is

not required.

To estimate the cost for each design, an estimating procedure

outlined in the Electrical Estimating Handbook was followed.

1

The

general approach involves: (1) counting the additional materials used,

(2) calculating the amount of labor required to install the materials,

(3) determining the dollar value of the materials and labor, and (4)

calculating the electrical subcontractors 1 overhead and profit. A GFCI

circuit breaker device cost of $25 was used. This cost is representative of the 1975 electrical contractor price (which is almost a 50

percent reduction from the list price) of several manufacturers of

GFCI devices. Number 14 non-metal lie sheathed cable with ground costing $.05 per foot was assumed to be used. The labor time was estimated

using the Electrical Estimating Handbook . Hourly union wages including

fringe benefits, by Census region were used to calculate the dollar

labor cost. An overhead rate of 15 percent and a profit rate of 10

percent were used to estimate subcontractor overhead and profit.

Tables 4.2 through 4.4 summarize the results. Table 4.2 presents

the estimated installation cost by type of electrical layout and by census region. Table 4.3 presents the estimated number of electrical

layouts by census region. The aggregate installation cost by census

region and type of electrical layout is presented in Table 4.4. The

total added installation cost is estimated at over $92 million, or about $53 per unit. Of the $92 million about $49 million was for

materials, $24 million for labor, and $19 for electrical contractor,

overhead and profit.

The $53 per unit estimate falls within the range of other GFCI

cost estimates. The 1975 Building Construction Cost Data estimated

a cost of $60 per residence to provide GFCI protection in bathrooms

and outdoors using a circuit breaker GFCI. The Florida Homebuilders

Association claimed in early 1976 that GFCI requirements added between

1 Cohen, I.M., Electrical Estimating Handbook , Construction Publishing

Company, Inc., New York, New York, 1975.

2 This price was obtained from the 1975 edition of Building Construc- tion Cost Data , Robert Snow Means Company, 1975 for 14-2 TW type

cable.

3 Obtained from Building Construction Cost Data , Robert Snow Means

Company, 1975, for electrical subcontractors having an annual volume

of between .4 to 1.5 million dollars.

4 Ibid, p. 201.

42
TABLE 4.2

Estimated Installation Cost Per Unit by

Electrical Layout and Census Region

Type of Design

Dollars*

Northeast North Central South West

D1 69.00 68.30 63.60 68.60

D2 71.10 70.30 65.40 70.70

D3 32.60 32.60 32.60 32.60

* Rounded to nearest $.10

43
TABLE 4.3

Estimated Number of Electrical Layouts, by Census Region

Number of Units (in thousands)

Type of Design Northeast North Central South West Total*

D1 82 136 260 119 596

D2 55 89 192 94 430

D3 104 147 281 179 710

Total 241 372 733 392 1736

Components may not add to totals due to rounding. Computed as a 1971-1975 average from Characteri sties of New Housing , Construction

Reports Series C25-75-13. Design D1 and D2 statistics derived from

Table 14, where houses less than 1600 square feet are defined as D1

and houses more than 1600 square feet are defined as D2. Design D3

statistics derived from Table 17.

The states contained in each major census region are:

Northeast --Mai ne. New Hampshire, Vermont, Massachusetts,

Rhode Island, Connecticut, New York, New Jersey, and

Pennsylvania; North Central —Ohio, Indiana, Illinois,

Michigan, Wisconsin, Minnesota, Iowa, Missouri, North

Dakota, South Dakota, Nebraska, and Kansas; South -- Delaware, Maryland, District of Columbia, Virginia, West

Virginia, North Carolina, South Carolina, Georgia,

Florida, Kentucky, Tennessee, Alabama, Mississippi,

Arkansas, Louisiana, Oklahoma, and Texas; West --Montana,

Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah,

Nevada, Washington, Oregon, California, Alaska and Hawaii.

44
Table 4.4

Estimated Aggregate Installation Cost by

Type of Electrical Layout and Census Region

Mil lions of Dollars

Type of Design Northeast North

Central

South West Total*

D1 $5.66 $9.30 $16.54 $8.16 $39.66

D2 3.91 6.26 12.56 6.64 29.37

D3 3.39 4.79 9.16 5.84 23.18

Total $12.95 $20.35 $38.26 $20.64 $92.21

* Components may not add to totals due to rounding.

45
$60 and $135 to the cost of a unit.-*- A December 1976 survey by the

National Association of Homebuilders listed the median cost to provide

GFCI protection for an outdoor receptacle at $35 and the median cost

to provide GFCI protection in bathrooms at $40.

4.3 GFCI ANALYSIS

4.3.1 GFCI Technical Characteristics

The technical characteristics of GFCIs which relate to design,

reliability, durability, quality, and installation are primarily

governed by Underwriters' Laboratory Standard 943.

There is only limited information available on durability, or

on mechanical/electrical failure. The most significant problem associated with GFCIs concerns "false" or "nuisance" tripping. A typical

complaint was voiced by a representative of the National Association

of Home Builders to the National Electrical Code Panel considering

proposal amendments for the 1978 National Electrical Code.

During the past 2 years, our firm has made over 2000 GFI

installations in single family dwellings and has experienced

numerous operational failures due to normal leakage in television sets, in fluorescent ballasts, in defrosting mechanisms

of refrigerators, in heating appliances, in excessive humidity

areas, and on circuits totaling more than about 200 feet of

wiring. Some local jurisdictions are limiting the GFI protected

circuits to only 4 outlets in order to avoid the inherent

accumulated leakages encountered in normal circuit distances

. . . many homeowners will deliberately make the GFI inoperative rather than submit to the many nuisance trippings.

Some tripping problems in early GFCI devices from failure of the

device to function properly or due to electromagnetic interference have

been corrected. The Underwriters ' Laboratory GFCI Standard requires a test circuit which is to be used monthly to determine if the GFCI

is functioning properly. Other tripping problems occur due to misapplication of the GFCI such as improper installation, or long circuits

"Florida Builders Open Fire on Regulations that Up Housing Costs,

" House and Home , January 1976, p. 40.

p Economic News Notes for the Building Industry , National Association

of Homebuilders, February 1977, p. 3

p Preprint of the Proposed Amendments for the 1978 NEC , p. 31.

46
with too many outlets so that the current leakage exceeds the trip

level. As builders and electrical contractors gain more experience

with GFCIs many of the misapplication causes of tripping are likely

to be resolved.

Perhaps the primary effect of continued tripping may be that

building users will avoid using GFCI protected circuits, or they may

replace or remove the GFCIs. Builders or electrical contractors experiencing tripping problems may respond in various ways which increase

the installation cost (such as installing two GFCIs where only one is required) to reduce customer complaints and call back costs.

The tripping problem may also affect the effective useful life.

Over time, the waterproof outdoor receptacles may deteriorate, admitting moisture. Since moisture may greatly reduce the electrical resistance of non-metallic materials, additional current leakage (which will cause tripping) is likely to occur.

In the absence of more complete information, this case study will use an effective useful life of 20 years.

4.3.2 Estimating the Potential Benefits and Costs

Benefits

The potential number of lives saved in the base year was estimated

(in Section 4.1.3) to be about 1.2. The potential number of lives

saved over the assumed useful life of the GFCIs is about 24 (1.219

x 20 = 24.38).

Costs

The initial change in construction costs was estimated (in Table 4.4)

to be about $92 million. In addition to installation costs, each GFCI

has a small electrical operating cost. Preliminary laboratory measurements at the National Bureau of Standards of several 1975-76 manufactured GFCIs indicate that the models tested used between 7 and 9

kilowatt hours (KWH) per year. Using a consumption rate of 8 KWH

per year for the 1.736 million GFCIs assumed to be installed in 1975

gives an estimate of annual energy consumption of nearly 14 million

KWH. At $.04 per KWH, the yearly operating cost is $555,520. The

present worth of the annual energy consumption is about $4.7 million

in 1975 base year dollars. This is obtained by multiplying the uniform

present worth factor for year 20 from Table 3.1 (8.514) by the annual

energy cost (8.514 x $555,520 = $4,729,697).

47
Adding the initial construction cost and the present worth of

energy costs together gives a total cost over the useful life of

nearly $97 million ($96,939 million).

4.3.3 Estimating the Cost Per Life Saved

The estimated cost per life saved is nearly $4 million ($96,939

million/24.38 lives = $3,976 million per life saved).

4.3.4 Analysis of Injuries and Electrical Fire Losses

Injuries

There are no national statistics on electric shock injuries in

the home. The State of California has records for the years 1963-1972

on electric shock deaths and injuries at constructions sites. There were a total of 888 injuries requiring medical attention and 11 deaths,

or about 80 injuries for each fatality. 1 In the newspaper clipping

study which reported on fatal and non-fatal electric shock in the

home, over 80 percent of all accidents reported were fatalities (200

of 243). Thus for every non-fatal accident reported in a newspaper,

about 5 fatal accidents were reported.

Both sets of data are extremely limited. The California data does

not contain information on the severity of injuries and concerns

electrical accidents at the construction site rather than at the home.

In the newspaper clipping study it is likely that the injuries reported

are relatively severe. However, newspapers are probably far less likely

to report injuries than deaths. Taken together, the two studies suggest

that there are more injuries than deaths due to electric shock, but

that most injuries are not severe.

If the California construction site injury to death ratio is

typical of the injury to death ratio for electric shock accidents

in the home then the estimate of the annual number of injuries averted

by GFCIs is about 98 (80 x 1.219 = 97.52).

^These statistics are cited in a report to 0SHA: Ground Fault Circuit

Protection: Preliminary Assessment of Technol goical Feasibility and

Economic Impacts , Arthur Young and Company, 1976, pp VI 9 to VI 11.

O

^ Preprint of the Proposed Amendments to the 1971 NEC , p. 45.

48
Fire Losses

Although GFCIs are intended to avert electric shock deaths they

may also reduce fire losses in residences. However it is not likely

that the magnitude of such benefits would be large. Since specific

information on the effect of GFCIs in preventing fire losses is

limited, the brief analysis presented here is only intended to show

that these benefits are relatively small.

The National Fire Prevention and Control Administration (NFPCA)

estimated that between (7000-9000) fire deaths occurred annually during

the period 1970-74. A recent Fire Journal article estimated that

2 percent of U.S. fire deaths resulted from residential fires in

which electrical equipment ignited a part of the building structure.

If there were 8000 fire deaths in 1975, then the estimate of electrical

fire deaths in the home resulting from electrical equipment igniting

a part of the building structure is about 160 (8,000 deaths x .02

= 160). For houses built in 1975, the estimated number of fire

deaths in this base year is about 3.8 (160 x .024 = 3.84). Electrical

circuits protected by GFCIs are only a small proportion of the electrical circuits in residences. For example, if they represent 15

percent, then the estimated number of fire deaths which might be

averted by GFCIs becomes about .58 (.15 x 3.84 = .576). Finally,

a GFCI will not trip a circuit which is overheating unless a ground

fault occurs. Circuit breakers (which are already required) will

trip a circuit under short circuit conditions. Thus the added protection of GFCI over that of a circuit breaker is likely to be small.

If, for example, ground faults which did not occur under short circuit

conditions ignited 25 percent of the electrical fires, then the potential number of electrical fire deaths saved in the base year is estimated to be about .14 (.576 x .25 = .144). Over a useful life of 20

years the total lives saved are estimated to be about 2.88. A similar

analysis could possibly be made for fire injuries and property damage;

however even less information is available.

Vri strom, Geraldine, Fire Deaths in the United States: Review of Data

Sources and Range of Estimates , National Fire Data Center, National

Fire Prevention and Control Administration, Washington, D.C., 1977.

2 Clark, Frederic B. and Ottoson, John, "Fire Death Scenarios and

Firesafety Planning," Fire Journal , May 1976, pp. 20-22 and 117-118.

2 "Fire and Fire Losses Classified, 1975,

" Fire Journal , National

Fire Protection Association, November 1976, pp. 17-19 estimated

property loss of over $1.9 Billion for one and two family dwellings

and apartments in 1975. However, a similar analysis to the fire

death analysis above would estimate that annual property damage

averted by GFCIs in 1975 was less than $100,000.

49
4.4 GFCI Sensitivity Analysis

The estimates of the cost per life saved in Section 4.3 depend

upon several sets of assumptions and estimates which are subject to

a good deal of uncertainty. Sensitivity analysis is one way to evaluate

such uncertainty. Table 4.5 illustrates the technique. The left column

describes the set of key assumptions and estimates used in the analysis.

For reference the calculations in Section 4.3 have been repeated as Case 1. Case 2 uses a set of "optimistic" estimates and assumptions.

Case 3 uses a set of "pessimistic" estimates and assumptions. Some

parameters remain constant in all three of the cases. They are the

percentage of the housing stock protected, the useful life, the number

of units protected, and the present worth analysis of energy

consumption.

For the optimistic set of assumptions in Case 2, the following

changes in assumptions were made: (1) An annual death estimate which

is about 10 percent larger than the reported deaths is used to account

for the uncertainty of the reported statistic; (2) Recognizing that

newspaper clipping studies are not based upon statistical sampling,

the estimate of the percentage of deaths occuring outdoors or in

bathrooms is increased by about 10 percent; (3) The added effectiveness of GFCIs over grounding is increased to .43. This assumes that

all electric shock deaths in bathrooms and 80 percent of all outdoor

electric shock deaths can be averted by GFCIs. Case 2 continues to assume that grounding will avert half of the deaths which GFCIs avert;

(4) Table 4.2 estimates an installation cost for Designs D1 and D2

between $63.65 and $71.20. These costs are high compared with the

$60 estimate by the 1975 Building Construction Cost Data cost

estimating guide. However, the estimate for design D3 in Table 4.2

of $32.60 is probably too low because some multifamily units are

as large as single family units and have outdoor receptacles. Since

these estimates are subject to uncertainty, the average cost per unit

is reduced about 15 percent to $45. The optimistic set of assumptions

yields an estimate of about $2.5 million cost per life saved.

For the pessimistic set of assumptions in Case 3, the following

changes in assumptions were made: (1) Recognizing that newspaper

clipping studies are not based upon statistical sampling, the estimate

of the percentage of deaths occuring outdoors or in bathrooms is

decreased by about 10 percent; (2) The added effectiveness of GFCIs

over grounding is decreased to .26. This assumes that all electric

shock deaths in bathrooms and 1/2 of all outdoor electric shock deaths can be averted by GFCIs. This also assumes that grounding will avert

60 percent of those deaths which GFCIs might avert; (3) Finally,

a small increase in the average installed cost per unit is assumed.

1 Building Construction Costs Data, Robert Snow Means Company, 1975,

p. 201.

50
Table 4.5

Sensitivity Analysis

Key Assumptions Case #1 Case #2 Case #3

(1) Annual Deaths 290 320 290

(2) % Housing Stock Protected .024 .024 .024

(3) % Deaths Outdoors/in

Bathrooms

.455 .50 .40

(4) Added GFCI Effectiveness .385 .43 .264

(5) Annual Lives Saved

(1) x (2) x (3) x (4)

1.219 1.651 .724

(6) Useful Life 20 20 20

(7) Lives Saved Over Useful

Life (5) x (6)

24.38 33.02 14.48

(8) Number of Units

(in millions)

1.736 1.736 1.736

(9) Average Installation Cost $53.11 $45.00 $55.00

(10) Total Installation Cost

(8) x (9)

$92,210,000 $78,120,000 $95,480,000

(ID Annual Energy use per

GFCI (in KWH)

8 8 8

(12) Cost per KWH $.04 $.04 $.04

(13) Annual Energy Cost per

GFCI (11) x (12)

$.32 $.32 $.32

(14) Number of GFCIs

(in millions)

1.736 1.736 1.736

(15) Annual Energy Cost

(13) x (14)

$555,520 $555,520 $555,520

(16) Present Worth of Energy

Cost

$4,729,697 $4,729,697 $4,729,697

(17) Total Cost (10) + (16) $96,939,697 $82,849,697 $100,209,697

(18) Cost per Life Saved

(17) * (7)

$3,976,198

51

$2,509,076 $6,920,559
A comparison of Case 1 and Case 3, which have nearly the same total costs, shows the strong influence which assumptions concerning

the effectiveness of GFCIs have on the outcome.

Sensitivity analysis in which only one assumption is varied was

also performed. One assumption which has an important effect on the

outcome is the effective useful life. Table 4.6 shows how the costper-life saved changes for different assumed GFCI useful lives.

Table 4.6

Cost Per Life Saved for Different GFCI Lives*

Assumption Case #1 Case #2 Case #3

20 years $3,976,000 $2,509,000 $6,921 ,000

15 years $5,275,000 $3,325,000 $9,181,000

25 years $3,192,000 $2,015,000 $5,554,000

* Rounded to the nearest thousand dollars

The first row repeats the results for each case from Table 4.5.

Reducing the useful life increases each outcome while increasing the

useful life decreases each outcome.

An alternative way to use sensitivity analysis is to establish a benchmark value for the cost per life saved and then vary the parameter

of interest keeping all other parameters fixed. For example, as the

market for GFCIs expands the price for the device may decline due

to economies of scale in production or increased competition by producers. Price reduction has occurred for smoke detectors and may

possibly occur for GFCIs.'

Using sensitivity analysis the question can be asked "By how much

would the 1975 average installation cost need to decline to reduce

the cost per life saved to a given level?" Table 4.7 examines this

question for the three cases, and for three levels of outcome.

1 » There is little evidence that installation costs have declined since

1975. The 1978 edition of Building Construction Cost Data estimates

an average installation cost of $70.

52
Table 4.7

Average Installation Cost Needed

to Achieve a Given Cost Per Life Saved

Case

Cost Per Life Saved

$1 Million $2 Million $3 Million

Case #1 $11.30 $25.40 $39.40

Case #2 $16.30 $35.30 $54.30

Case #3 $5.60 $14.00 $22.30

* Average Installation cost rounded to nearest $.10.

The analysis shows that a significant decline in average installation costs is necessary before the cost per life saved would reach

a $2 million level.

The sensitivity analysis summarized in Tables 4.5 and 4.7 suggest

that a lower bound estimate of cost per life saved from electric

shock using the most optimistic assumptions is probably about $2.5

to 3 million. The Case 1 estimate of nearly $4 million appears more

likely.

53
5.0 SUMMARY AND CONCLUSIONS

This report has developed a taxonomy to define and categorize the

different types of building code impacts. Three major types of building

code impacts were described. Building code system impacts are related

to the institutional system which has evolved to regulate building

construction through building codes. Income distribution impacts

concern the way building codes affect the welfare of different groups

in the economy. Benefit-cost impacts concern positive and negative

effects or consequences of a code or of code provisions upon society

as a whole.

The major purpose of this report has been to suggest a method

to measure and evaluate many of the potential benefit and cost impacts

of specific building code provisions. A fundamental assumption is

that more complete information will lead to better public decisions. . The assessment approach provides more complete information by developing a model to assemble and organize available information. Each step

is explicit, and the approach requires that assumptions be clearly

identified. Sensitivity analysis is used when benefit or cost

information is incomplete or uncertain.

The 1975 National Electrical Code requirement for the use of

Ground Fault Circuit Interrupters was presented to illustrate the

evaluation methodology. Using sensitivity analysis, a range of estimates were made of how much it costs society to save one life from

electric shock by means of the GFCI provision. The cost per life

saved was estimated to be nearly $4 million. Under the most optimistic

set of assumptions the lower bound estimate is about $2.5 to $3 million.

A more pessimistic set of assumptions placed the cost per life saved

at nearly $7 million.

In an area as complex as building regulations, no claim is made

that this approach can be applied to every code provision. Statistics

for some types of non-residenti al buildings and for some types of

building hazards may not be adequate. However, there would appear

to be many code provisions for which the approach is appropriate.

To make the assessment approach easier to use, it is recommended

that existing information on building characteristics, and building

hazards and losses be compiled and a step-by-step handbook containing

worksheets and working aids be prepared. For some building types

a computer based model might be appropriate.

To implement and familiarize members of the building community

with the approach, it is also recommended that the assessment

methodology be applied to other building code provisions. In addition,

a similar assessment methodology can be developed for other types of

building regulations and standards. The methodlogy might also be

extended by developing a more formal probabilistic approach to evaluate

uncertainties.

54
REFERENCES

A Decent Home , Report of the President's Committee on Urban Housing,

U.S. Government Printing Office, Washington, D.C., 1969.

The Annual Housing Survey: 1974 Part A , Current Housing Report

Series H-150-74, U.S. Bureau of Census, Washington, D.C., 1976.

Apostolakis, G. , Mathematical Methods of Probabilistic Safety

Analysis , University of California, Los Angeles, September 1974.

Beausoliel, Robert W. and William J. Meese, Survey of Ground Fault

Circuit Interrupter Usage for Protection Against Hazardous Shock , National Bureau of Standards Building Science Series 81,

Washington, D.C., 1976.

Buchbinder, Benjamin, Susan G. Helser and Fred Offensend, Prel iminary Report on Evaluating Alternatives for Reducing Upholstered

Furniture Fire Losses , National Bureau of Standards Interagency

Report 77-1381, November 1977.

Building Codes: A Program for Intergovernmental Reforms , Advi sory

Commission on Intergovernmental Relations, Washington, D.C., 1966.

Building the American City , National Commission on Urban Problems,

Washington, D.C., 1968.

Characteristics of New Housing: 1975 , Construction Report - Series

C25, U.S. Bureau of Census, Washington, D.C., 1976.

Clarke, E.M. and A.J. Van Horn, Risk-Benefit Analysis and Public

Policy: A Bibliography , Energy and Environmental Policy Center,

Harvard University, November 1976.

Clarke, Frederick B., II and John Ottoson, "Fire Death Scenarios

and Fi resafety Planning," Fire Journal , May 1976.

Cohen, I.M., Electrical Estimating Handbook , Construction Publishing Company, Inc., New York, 1975.

Dasgupta, Aj it, and D.W. Pierce, Cost Benefit Analysis: Theory

and Practice , Harper and Row, New York, 1972.

Economic News Notes for the Building Industry , National Association of Homebuilders, February 1977.

Faigin, B.M., 1975 Societal Costs of Motor Vehicle Accidents , U.S. Department of Transportation, National Highway Traffic Safety

Administation, December 1976.

55
Feeley, Rich, Chapman, Diana, and Fielding, Jonathan F., "Structural

Codes and Patient Safety: Does Strict Compliance Make Sense?."

American Journal of Law and Medicine , Vol. 3, No. 4, Winter 1977-78,

pp 447-454.

Field, Charles G. and Steven R. Rivkin, The Building Code Burden , Lexington Books, Lexington, 1975.

Field, Charles G. and Francis T. Ventre, "Local Regulation of Building

Agencies, Codes and Politics," Muncipal Yearbook 1971 , International

City Management Association, Washington, D.C., 1971.

"Fire and Fire Losses Classified, 1975," Fi re Journal , National Fire

Protection Association, November 1976.

"Florida Builders Open Fire on Regulations That Up Housing Costs,"

House and Home , January 1976.

Fristrom, Geraldine, Fire Deaths in the United States: Review of Data

Sources and Range of Estimates , National Fire Data Center, National

Fire Prevention and Control Administration, Washington, D.C., 1977.

Grant, Eugene L. and W. Grant Ireson, Principles of Engineering Economy , 5th ed. , The Ronald Press Co., New York, 1970.

Ground Fault Circuit Protection: Preliminary Assessment of Technolog- ical Feasibility and Economic Impacts , Arthur Young and Company, 1976.

Hemenway, David, Industrywide Voluntary Product Standards , Ballanger

Publishing Co., Cambridge, Mass, 1975.

Jones-Lee, M.W., The Value of Life: An Economic Analysis , University

of Chicago Press, Chicago, 1976.

Kelman, S. , "Regulation by the Numbers - A Report on the Consumer

Product Safety Commission," Public Interest , No. 36, Summer 1974.

Lave, Lester B., "Product Safety: An Economic View," ASTM Standardization News , February 1973.

Mahaffey, C.T. , A Special Study on Building Codes , Background Paper

No. 18 for the National Commission on Urban Problems, Wash. D.C., 1968.

> Mishan, E.J., "Evaluation of Life and Limb: A Theoretical Approach,"

Journal of Political Economy , July-August 1971.

Mishan, E.J., Cost-Benefit Analysis: An Introduction, Praeger, New

York, 1971.

National Electrical Code , 1975 Edition, National Fire Protection

Association, Boston, 1975.

56
Office of Management and Budget, Executive Office of the President,

Circular No. A-94 (Revised), March 27, 1972.

Oster, Sharon and John Quigley, "Regulatory Barriers to the Diffusion

of Innovation: Some Evidence from Building Codes," The Bell Journal of

Economics , Vol. 8, No. 2, Autumn 1977.

Petersen, Stephen R., The Role of Economic Analysis in the Develop - ment of Energy Conservation Standards for New Buildings , National

Bureau of Standards Interagency Report 78-1471, May 1978.

Posner, R.A., "Theories of Economic Regulation," Bell Journal of

Economics and Management Science , Vol. 5, No. 2, Autumn 1974.

Preprint of the Proposed Amendments to the 1971 NEC , National Fire

Protection Association, Boston, (undated).

Preprint of the Proposed Amendments to the 1978 NEC , National Fire

Protection Association, Boston (undated).

Ruegg, Rosalie T. , John S. McConnaughey , G. Thomas Sav and Kimberly A.

Hockenbery, Life-Cycle Costing: A Guide for Selecting Energy Conser- vation Projects for Pub! ic Buildings , National Bureau of Standards

Building Science Series 113, June 1978.

Sav, G. Thomas, Natural Disasters: Some Empirical and Economic

Considerations , National Bureau of Standards Interagency Report 74-473,

February 1974.

Schoen, Richard, Alan Hirshberg and Jerome Weingart, New Energy

Technologies for Buildings: Institutional Problems and Solutions , Ballinger Publishing Company, Cambridge, Mass., 1975.

Terner, I.D. and F.C. Turner, Industrialized Housing: The Opportunity

and the Problem in Developing Areas , U. S. Department of Housing and

Urban Development, Washington, D.C., 1972.

Ventre, Francis T. , "Decision-Aiding Communications in the Regulatory

Agency: The Partisan Uses of Technical Information," Research and

Innovation in the Building Regulatory Process , National Bureau of

Standards Special Publication 473, Washington, D.C., 1977.

Ventre, Francis T. , Social Control of Technological Innovations: The

Regulation of Building Construction , Unpublished PhD dissertation,

Department of Urban Studies and Planning, Massachusetts Institute of

Technology, 1973.

57
Vital Statistics of the United States Vol. II Mortality Part A,

'National Center for Health Statistics, U.S. Department of Health,

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Zeckhauser, Richard, "Procedures for Valuing Lives," Public Policy , Volume 23, No. 4, Fall 1975.

58
NBS-114A (REV. I 1-77)

u.S. DEPT. OF COMM. l. PUBLICATION OR REPORT NO. 2. Gov’t Accession

BIBLIOGRAPHIC OAT*

3. Recipient’s Accession No.

4. TITLE AND SUBTITLE

An Economic Analysis of Building Code Impacts: A

Suggested Approach

5. Publication Date October 1978

6. Performing Organization Code

744

7. AUTHOR(S)

John S. McConnaughey , Jr.

8. Performing Organ. Report No.

9. PERFORMING ORGANIZATION NAME AND ADDRESS

NATIONAL BUREAU OF STANDARDS

DEPARTMENT OF COMMERCE

WASHINGTON, D.C. 20234

10. Project/Task/Worlc Unit No.

11. Contract/Grant No.

12. Sponsoring Organization Name and Complete Address (Street, City, State, ZIP) 13. Type of Report & Period Covered

Final

14. Sponsoring Agency Code

15. SUPPLEMENTARY NOTES

16. ABSTRACT (A 200-word or less factual summary of moat significant information. If document includes a significant

bibliography or literature survey, mention it here.) This report suggests an evaluation approach which can be used by

building officials and legislative bodies faced with making building

code decisions. A method to evaluate many of the potential benefit and

cost impacts of specific building code provisions is developed. The

report also defines and categorizes the economic impacts of building

codes. While no approach to classifying building code impacts will be

fully appropriate for all uses, the definitions and categories proposed

may help to clarify or reconcile some of the differing opinions

concerning the impact of building codes. Finally, the report illustrates

the suggested approach by evaluating the 1975 National Electrical Code

requirement for the use of Ground Fault Circuit Interrupters (GFCIs)

in residences. Based on sensitivity analysis, estimates are made of how

much it costs society in order to save one life through the GFCI code

provision. This case study conclude that the estimated cost to save a life is nearly $4 million. A lower bound estimate of the cost to save

a life is about $2.5 to $3.5 million.

17. KEY WORDS (six to twelve entries; alphabetical order; capitalize only die first letter of the first key word unless a proper name; separated by semicolons)

Benefit-cost analysis; benefit-risk analysis; building codes arid standards; building

regulations; building safety; economic analysis; economics of safety; electric shock;

ground fault circuit interrupters.

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I I Ordfer From National Technical Information Service (NTIS)

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